Business Daily from THE HINDU group of publications
Friday, Aug 24, 2007
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Business Daily from THE HINDU group of publications Friday, Aug 24, 2007 ePaper |
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Money & Banking
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Interview Continuity is the theme of new CMD of Indian Bank
Mr M.S. Sundara Rajan
N.S.Vageesh Chennai, Aug. 23 The Indian Bank Chairman and Managing Director, Mr M.S. Sundara Rajan, is described by his former colleagues in Union Bank where he served earlier, as ‘ethical, simple, soft-spoken workaholic and very knowledgeable’. They call him an orator who can speak for hours at a stretch and credit him with being extremely persuasive. They say he is a man without airs. Few bankers get that kind of a rousing recognition from their peers. Mr Rajan has a post-graduate degree in economics; is an associate of Indian Institute of Bankers besides also having a Company Secretary qualification. He had started out with Indian Bank for 42 days in late 1972 before moving to Union Bank where he grew to become the General Manager of the Mumbai Zone. On April 1, 2006, he became the Executive Director of Indian Bank. On June 4, 2007, he took over as CMD of Indian Bank – a move that he describes as one of the shortest and easiest he had to make – barely 10 yards from his earlier office! Talk to Mr. Rajan for a few minutes and it is clear that he is well read. He draws inspiration from a number of management books and passes on these insights to his colleagues often. He admits to being very influenced by Shiv Khera and his positive thinking approach. He names former Union Bank Chairmen, Mr A.T. Paneer Selvam and Mr V. Leeladhar among those whom he admired and learned from. He has embarked on a drive to make his colleagues enjoy their work. His transparent concern for his staff and his willingness to ignore protocol and formality are evident in a number of his actions. For instance, he has asked his staff not to receive him at the station/airport or with bouquets – but give him performance. It is clear that he will leave his imprint on the bank in his own quiet way. Excerpts from the interview: What is the agenda that you have set for yourself for the next three years? It will be about continuity. I have been associated with Dr Chakrabarty and the initiatives and mission statement framed then. Sometimes, when there is a transition and a new CMD comes in, there may be some reversals. For the new CMD, quite some time is spent in understanding the bank and its culture. I was lucky in that I served as ED here for a year and the effort from ED to CMD was the least – 10 yards! I will pursue the same agenda. There was complete unity of thought with my predecessor and I will follow the roadmap that has already been laid down. What is the business growth outlook for Indian Bank this year? We are confident of a good growth in business. In the first quarter of this fiscal, the growth in deposits was 19.95 per cent compared to about 14.85 per cent last year. This was not due to a conscious attempt to raise bulk deposits. And Indian Bank has not offered higher rates than other banks. We had enough liquidity. We did not want to grow for growth’s sake – because once the rates go up, there might be a steep fall in margins. Indian Bank’s net interest margins were at 3.70 per cent last year. We expect advances to grow at 25 per cent this year. The second half of the fiscal is the busy season and we will probably grow faster then. Do you see a slowdown in growth happening anywhere? The 25% growth in advances itself is good. With advances, one has to be careful, since if you expand too fast, without your knowledge, you’ll get some black sheep. We want, what in banker’s parlance are called “sleep well accounts”, i.e. even in sleep, these accounts should not cost any disturbance. We are seeing growth in all sectors (textile, steel, cement, auto, pharma). Apart from this, we have our focus on agriculture, small-scale industries and retail credit. Are you facing any increase in non-performing loans – particularly in the housing loan sector? We are not facing any problem. We have restructured our loan processes. If we are going to make use of the branch for processing, appraising and disbursement, then definitely there will be an increase in NPAs. But we are having these loans processed at a common centre – using the hub and spoke model. Our experience has been happy. We are growing cautiously. Why hasn’t your floating rate for home loans gone up? We declare ourselves as a common man’s bank – we have to live up to the expectations. Even when other banks hiked their rates in early February, we didn’t do it. My prime-lending rate is 12.50 per cent, lower than my big brother State Bank of India. The floating rate for home loans is between 9 and 9.75 per cent. We haven’t changed it. As long as we could protect our net interest margin, there was no need to hike the rates. What about your deposit rates? The growth in business is not always a function of interest rate alone. Let me admit that my deposit rates are low. My core deposits (low cost deposits and term deposits at card rates) increase every week by Rs 200 crore to Rs 300 crore. I tell this to my branch managers, when they point to our rates being low and want it hiked to match competition. I tell them that if growth is a function of interest rates, then nobody should keep any money in savings account. Yet those accounts are also growing. People are not that much interest elastic. They are largely interest-inelastic. Give the customer good service and the deposits will grow automatically.
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