The Hindu Business Line : ‘Strategic alliances will be the order of the day’

A NIM of 3 per cent is not bad. But 2.8 per cent is a matter of concern and if it comes below that, it is a matter of real worry. Dr K. Ramakrishnan CMD, Andhra Bank

Dr K. Ramakrishnan,CMD, Andhra Bank

G.Naga Sridhar
N.S.Vageesh

Chennai, July 3 Dr K. Ramakrishnan feels at home whenever he lands at any airport, anywhere in the world. That’s because he is already familiar with the topography, the length of the runway, the wind speed, weather conditions and other details that a pilot must be aware of.

Likely, he could give a tip or two on how to make the perfect landing, since he has practised landing at these airports on the Microsoft Aircraft Simulator module many times. He says that the simulation has been done well – it has reproduced the exact conditions – and he has checked it out with many airports around the world. What started as a hobby has become an obsession and he often spends more than an hour on this.

Besides ‘virtual flying’, Dr Ramakrishnan has half a dozen other hobbies. He gobbles up at least one book every week, loves cooking, and plays five musical instruments. He listens to and regularly participates in radio talk shows on FM radio. A fitness freak who jogs about seven km daily, he thinks meditation and a positive attitude help bring focus to one’s job.

And oh! One almost forgot. He also does banking! He holds a job as Chairman and Managing Director of Andhra Bank. Ask him about his contribution to the bank and he modestly replies that it is nothing really. He takes some pride in the fact that the business has doubled in the three years that he has been at the helm and that the institution is growing.

Colleagues who have known him long say that he is straight-forward in his approach, doesn’t waver in decision making and takes his colleagues along. Citing an instance of his capacity and confident nature, an old colleague remarked that when he was handling the preparations for the Y2K problem in another bank nearly a decade ago, he refused an offer from the then Chairman to travel abroad and see how other banks were coping. His organisational skills were most recently visible when Andhra Bank hosted the BANCON event in 2006 in Hyderabad and set a new benchmark for event management.

His shiny brown desk is clean – there are no papers. His jocular remark on this, “I enjoy myself. I don’t overwork”. He says he delegates work and his staff take good care not to disturb him unnecessarily. He does say, “The job is not without pressures. People have their own expectations. Pressures come from everywhere - from within and without. You must not lose your focus. When you have focus, it makes you effective. Within the time available, you manage yourself well. If you are positive in your attitude, you can enjoy your work and handle it well. Many times, in our work, we remember the problems – but not the lessons that these problems taught us.”

He’ll be laying down office at the end of this month. His colleagues say that he will leave behind a strong bank and his successor will not have any problems. What next?

He shrugs off that question, saying a bit philosophically, “Nothing. The goal is to enjoy life. So long, one has accepted life as it came. I’ll continue like that. At 60, one is not desperate for another job.”

Somehow we don’t get the impression that he’ll fade into quiet retirement!

Excerpts from a recent interview at his office in Hyderabad:

What is the impact of the farm loan waiver scheme on Andhra Bank?

The impact on Andhra Bank is about Rs 1,260 crore. We have done this exercise carefully and had the results validated by zonal offices as well as audit teams.

What is the impact of recent hikes in policy rates?

The rate hikes do have an impact – everything from call rates, CBLO rates is going up. These are avenues that you have to resort to when liquidity gets tighter – partly because credit growth is picking up and also to repay high cost deposits that we had picked up earlier, that are now maturing. To that extent it will create some problems for banks. The intensity may be felt when credit picks up much more than now.

Are you ready to live with lower net interest margins?

Margins are going to shrink. For most of the banks – it has already come down during the last few years. There is a level below which it should not fall. I don’t mind an NIM of 3.5 per cent. That provides a cushion for me. A NIM of 3 per cent is not bad. But 2.8 per cent is a matter of concern and if it comes below that, it is a matter of real worry.

Many banks will have to look at other ways to augment their interest and fee income. We do have a sub-BPLR portfolio – there is good scope for increase in rates at least to PLR levels in certain segments.

We’ll be looking closely to increase rates, maybe 50 basis points or so in some segments. Our borrowings also may get dearer in a couple of months.

Have you seen any signs of slowdown in your bank?

No. We have not seen any slowdown. Our portfolio has been steady in terms of credit. Some withdrawals have been happening and that is intensifying.

The pick-up in credit is not bad at all. In the pipeline, we are seeing the usual amount of proposals coming up for sanctions. We are having constant demand for the purpose of new facilities. Things will improve.

There is a capacity expansion that is happening. There is a business and there are plans. You require money for that. There are always alternatives that people look at. . There is nothing to suggest that activity is slowing down.

Overseas expansion plans?

We have an office in Dubai that is 2 years old. We will soon have an office in New Jersey – we are expecting the necessary approvals from Federal Reserve any time now. We have identified the location for our premises and our people have been given work permits.

Who is your target customer there?

It is basically the existing ethnic population in the US. Andhraites have done very well in technology, medicine and other important professions. Many of them have been there for 50 years and made a mark. They have their roots here, balances here, and relationships here. They come to India regularly. The moment I put up an office there, they can take advantage of it.

We are also going in for the concept of drop boxes – Andhra Bank drop boxes will be kept in some important banks in the US – where customers can drop their cheques that will be collected by other banks and transferred here. The box is like a window for us. As things progress, we’ll be able to liaison between businesses here and there and then we can cross-sell other products. We get a foothold there now.

Where else?

We keep looking. This year we have the joint venture bank with Bank of Baroda in Malaysia coming up. It has to take the next logical step and work is going on for that. Many times we have to look at expanding by going for strategic alliances. Join hands with other banks with whom you are comfortable with, depute staff, pool capital and go together. You can’t always afford to have every thing on your own. Instead of putting the money in one branch, I can put it in three, with alliances. That will be the order of the day tomorrow.

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‘Strategic alliances will be the order of the day’