The Hindu Business Line : ‘Retail base, workforce will help us reach Rs 1.1-lakh cr biz’

Mangalore, July 17 Ask the Chairman and Managing Director of Bank of Maharashtra: “Who is your brand ambassador?”. The prompt reply is: “14,000 people working in my bank.”

Mr M.D. Mallya, CMD, believes that the confidence he has on the workforce would help in placing the bank among the Top 10 by 2010.

He is confident that the large base of retail customers and the strong support from people working in the bank will help it reach Rs 1.1 lakh crore business by 2010 when it completes 75 years.

Mr Mallya, who was in Mangalore recently, spoke to Business Line on various aspects of the bank and its growth plans. Excerpts:

How was the experience in the past 15 months?

2006-07 was very challenging. When I joined the bank in the last week of March 2006, I found that the strengths of this bank were far too many. But the strong points needed to be tapped for the growth of the bank.

What are the strong points?

The strong points are the large base of retail customers (of around 11 million), the network, the strategic locations where the branches have been placed, and the people working in the bank.

What steps were taken to tap them?

Using these positive aspects, we formulated a strategy to take it forward.

We put into place a theme called ‘Operation Transformation’.

The whole idea was based on three fundamental pillars — HR initiative, training initiative and technology.

We found there are reasonably well trained people with good expertise who are not properly utilised. I thought the best way of communication is one-to-one, and started to meet them.

Secondly, I started to have proper dialogues with the unions. They were extremely responsive. In the last 15 months, I never had any discussion with the unions on IR (industrial relationship) issues. On business development, they are extremely positive.

Then I started an exercise of building a shared vision. We prepared ‘Vision 2010’. I held sessions with each section — top management, middle management and the unions — to discuss on improving the bank. All these initiatives gave us a lot of momentum as far as business development is concerned.

What are the targets under ‘Vision 2010’?

The vision aims at doubling business from Rs 57,500 crore as of March 2007, to Rs 1.1 lakh crore in three years. Our vision in the next three years is to be among the first 10 banks at least in terms of efficiency and profitability parameters. Explain about the role of CASA (current account and savings account) in the bank’s growth?

As I mentioned, we have a large base of retail customers, and they are almost wedded to the bank. This is a difficult segment of customers to acquire, and retaining them is more difficult. Therefore, we paid extra emphasis on the growth of CASA and could achieve a 27 per cent growth over the previous year. Our CASA was 43.5 per cent as of March 2007. Overall deposit grew by 25 per cent. This ultimately resulted in the reduction of cost. Our total cost of deposit came down from 5.16 per cent to 5.12 per cent.

How much of your deposit is bulk?

Bulk deposits are reasonably on a lower side, in the range of 12 to 13 per cent. We are able to grow 25 per cent in deposits without any significant growth in bulk deposits.

Any plans for follow-up public offer?

Not at the moment. Our capital adequacy is 12 per cent as of March, which is reasonably good. We have headroom to raise both the upper Tier-II, lower Tier-II, as also perpetual debt in case of need. To meet the growing needs during 2007-08, a capital requirement of Rs 650 crore is needed, which we will be raising through a combination of Tier-II, upper Tier-II and perpetual debt. That being the case, there is no need for a follow-on offer. We would be able to get much better valuation for a follow-up offer may be in a year or so.

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