For Catholic Syrian Bank, the biggest challenge comes from NBFCs and their specialised financing arms. To deal with the increasing competition, the Bank has now implemented several key initiatives to reduce its turn around time for sanctioning loans. V. P. Iswardas, MD and CEO, CSB, talks to Mona Mehta on various challenges and the growing importance of corporate and retail banking in Rural and Semi-Urban Areas.
B&E: Did the global meltdown have an impact on the financials of CSB?
VPI: The bank’s performance has been very satisfactory during the last financial year. While our deposits and advances grew by 10% and 21% respectively, the credit deposit ratio improved to 64.01%. In terms of asset quality also, we have done well to reduce net NPAs to 1.58% from 2.39%. Moreover, in the last year itself, our provision coverage ratio crossed the required 70% benchmark, well before the RBI deadline of September 30, 2010. Also, our capital to risk assets ratio (CRAR) stood at 10.82% as against the regulatory requirement of 9%.
B&E: A break up of CSB’s total revenue indicates that retail banking is the most important business for CSB.
VPI: More than 80% of our branches are in rural and semi-urban areas. Thus, retail banking carries great significance for us. While retail deposits contribute to more than 75% of our business, 70% of our advances are also to the retail sector. Our total revenue from retail business during last fiscal was Rs.3.06 billion, up from Rs.2.97 billion in the previous year.
B&E: But that’s just 3% growth.
VPI: Retail banking always brings in a lot of challenges. Today, the biggest challenge for us in the retail space comes from NBFCs and their specialised financing arms. Matching up to their fast turn around time (TAT) for loan disposals is the biggest challenge for us. Nevertheless, for being competitive, we have not only reduced our personal loan rates, but have also started centralised processing of loan requests. This will help us in bringing down our average TAT and there by generating higher business in the long run.
B&E: Your asset quality is much better than many of the bigger banks in the country. How did you manage that?
VPI: During the last financial year, CSB’s net NPA came down to 1.58% from 2.39% at the end of the previous fiscal. Taking it forward, in the current financial year we are targeting another 25% reduction in the same. The recovery in NPA together with increase in advances will bring down our net NPA to nearly 0.70% by March 31, 2011.
B&E: What about new marketing initiatives?
VPI: At present, we are in the process of converting the bank into a financial supermarket. So apart from making all kinds of banking facilities available at our branches, we have also started offering various wealth management services. For example, we now act as Corporate Agent of Birla Sun Life Insurance Company Ltd. for life insurance and New India Assurance Company Ltd. and Export Credit Guarantee Corporation of India Ltd. (ECGC) for providing general insurance. To bring in students and senior citizens aboard, CSB has launched innovative and unique savings schemes like ‘CSB Students Support Savings Scheme’ and Acharya Deposits. We also have a range of personalised loan schemes like Profession Plus for professionals, CSB Women Support for working women, Farmer support for farmers, Senior Citizen Support for senior citizens et al. Thus, as of now, we have products covering the entire life cycle of our customers.
B&E: You say you are planning to target HNIs soon. But all banks are doing that even now. How do you plan to differentiate yourself?
VPI: Considering the increasing number of high net worth individuals (HNIs), we will be shortly launching privilege banking facility. It will be a lot different from others in terms of the gamut of services that we will offer to our customers. As per the scheme, a customer who maintains the stipulated minimum balance in the account can avail many critical banking and non banking services like ambulance/doctor on call, utility bill payments on a phone call et al.
Read more....
B&E: Did the global meltdown have an impact on the financials of CSB?
VPI: The bank’s performance has been very satisfactory during the last financial year. While our deposits and advances grew by 10% and 21% respectively, the credit deposit ratio improved to 64.01%. In terms of asset quality also, we have done well to reduce net NPAs to 1.58% from 2.39%. Moreover, in the last year itself, our provision coverage ratio crossed the required 70% benchmark, well before the RBI deadline of September 30, 2010. Also, our capital to risk assets ratio (CRAR) stood at 10.82% as against the regulatory requirement of 9%.
B&E: A break up of CSB’s total revenue indicates that retail banking is the most important business for CSB.
VPI: More than 80% of our branches are in rural and semi-urban areas. Thus, retail banking carries great significance for us. While retail deposits contribute to more than 75% of our business, 70% of our advances are also to the retail sector. Our total revenue from retail business during last fiscal was Rs.3.06 billion, up from Rs.2.97 billion in the previous year.
B&E: But that’s just 3% growth.
VPI: Retail banking always brings in a lot of challenges. Today, the biggest challenge for us in the retail space comes from NBFCs and their specialised financing arms. Matching up to their fast turn around time (TAT) for loan disposals is the biggest challenge for us. Nevertheless, for being competitive, we have not only reduced our personal loan rates, but have also started centralised processing of loan requests. This will help us in bringing down our average TAT and there by generating higher business in the long run.
B&E: Your asset quality is much better than many of the bigger banks in the country. How did you manage that?
VPI: During the last financial year, CSB’s net NPA came down to 1.58% from 2.39% at the end of the previous fiscal. Taking it forward, in the current financial year we are targeting another 25% reduction in the same. The recovery in NPA together with increase in advances will bring down our net NPA to nearly 0.70% by March 31, 2011.
B&E: What about new marketing initiatives?
VPI: At present, we are in the process of converting the bank into a financial supermarket. So apart from making all kinds of banking facilities available at our branches, we have also started offering various wealth management services. For example, we now act as Corporate Agent of Birla Sun Life Insurance Company Ltd. for life insurance and New India Assurance Company Ltd. and Export Credit Guarantee Corporation of India Ltd. (ECGC) for providing general insurance. To bring in students and senior citizens aboard, CSB has launched innovative and unique savings schemes like ‘CSB Students Support Savings Scheme’ and Acharya Deposits. We also have a range of personalised loan schemes like Profession Plus for professionals, CSB Women Support for working women, Farmer support for farmers, Senior Citizen Support for senior citizens et al. Thus, as of now, we have products covering the entire life cycle of our customers.
B&E: You say you are planning to target HNIs soon. But all banks are doing that even now. How do you plan to differentiate yourself?
VPI: Considering the increasing number of high net worth individuals (HNIs), we will be shortly launching privilege banking facility. It will be a lot different from others in terms of the gamut of services that we will offer to our customers. As per the scheme, a customer who maintains the stipulated minimum balance in the account can avail many critical banking and non banking services like ambulance/doctor on call, utility bill payments on a phone call et al.
Read more....
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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