The Hindu Business Line : Banks work overtime to fulfil consumers' dreams

WITH Onam just around the corner, there has been a flurry of activity in Kerala markets. Shops have begun to stock-up for the biggest annual purchase carnival in the State. The Government comes out with liberal salary advances and bonus announcements for it staff.

The innumerable brands are on their toes, vying for the customer's attention and trying to capture the biggest share in the market. Discounts and clearance sales are a plenty as the North Indian producer vies with the local shopkeepers in attracting customers.

But behind all these high-pitched sales and marketing of Kerala's harvest festival is the ubiquitous banker, without whom the Onam festivities would lose its punch. Several Kerala-based banks have come out with custom-built products, made for such occasions.

"We have a specific product for occasions such as Onam - SIB Utsav. This is a specific loan product from our bank, which is intended to establish and retain a long-term relationship with successive generations of each family, who avail this facility to celebrate auspicious occasions such as Onam," Dr V.A. Joseph, Chairman of South Indian Bank said.

The basic concept behind the product is to create `friend in need' relationship between the bank and the individual family. The target is not restricted to the individual borrower but extends to the whole family. The sole requirement being that the beneficiary should fall in the salaried class with adequate take-home pay or other income, in order to repay the loan.

Onam also witnesses a surge in credit disbursement through various other personal loan schemes from all the banks based in Kerala.

But the festive season for the Kerala banker commences much before Onam. "The boom in Onam credit commences ahead of the harvest festival when the shops and establishments start stocking up for the State's biggest fiesta. But most often the order book position of the shops far outstrips their cash availability. And most of them make a beeline for the banks for short-term credit," Mr N.R. Achan, Chairman of Catholic Syrian Bank said.

The South Indian Bank's pre-Onam credit extension to shops and establishments have already crossed over Rs 25 crore. We are confident that by the end of the season, the credit off-take by this specific segment would add up between Rs 75 to Rs 100 crore, Mr Joseph said.

The short-term credit extended to shops and establishments is often repaid quite fast, at the end of the season. But, their repayment is most often synchronised with the off-take of long-term credit by the retail customers. When the retail customers pick up their loans from commercial banks and make their Onam purchases, most of the commercial loans by shops and establishments are being repaid as the first purchases of the season are made. In effect, Onam means a surge of commercial credit, which is sustained through the year by a splurge of retail credit.

Banks like Catholic Syrian Bank have beefed up their customer loan portfolio to meet the emerging credit requirements of the erudite borrower. Like most other banks in the State, this bank too has been focusing on the burgeoning salaried middle class.

With one of the highest rate of literacy in the country, Kerala has a very visible middle class population. In order to woo the middle class to spend more, the Catholic Syrian Bank offers a bevy of products such as car loans, vehicle loans, VIP car loans, Kanakasree, gold loan, medi-cash for medical professionals, Casy Mithra and Professional Plus loan scheme for professionals. There is invariably a surge in demand for all kinds of retail loans during the Onam season, Mr Achan said.

The shops are not alone in offering festive season discounts during Onam season it extends to banks too. Banks like the State Bank of India have come out with specific product loan for Kerala, targeted at the Onam season. They have come out with rock-bottom rates in their housing loan scheme.

Their one-time housing loan offer, which is among the most competitive in the market, has been attracting customers in droves in the State. The harvest festival also coincides with one of the most auspicious periods in the Malayalam calendar, the new-year month of Chingam.

Traditionally it has been one of the most auspicious season to start any new venture, especially so in the case of building new houses.

The State Bank of India's offer comes at the most auspicious time, custom-built to meet the booming housing requirements of the State.

Onam is not just the occasion when the mythical king, Mahabali is supposed to visit every household in Kerala, but also an occasion when friends and relatives pay a visit to each other. Thus, it is not surprising that the harvest season witnesses a heavy rush from non-resident Keralites paying a visit to the State. For NRIs it most often turns out to be their annual visit and they need a lot of liquid cash when they arrive.

This results in a major surge in NRI remittances during the Onam season, Mr Joseph said. The purchases during the Onam season also perk up with the advent of the NRIs.

This also means more business for banks. It is quite often the spending of one whole year that the NRIs undertake in one short visit to their home State during the Onam season.

The same is the case with regard to the Keralite living outside the State. The most opportune time for them to visit their home is during the Onam season.

And most of them make it a point to visit the State before the end of the season. In this age of plastic money and cash less travel, the banks are the major channel for transferring money even among Keralites visiting the State during the season. Onam is invariably a busy season for the State's bankers. While there is much revelry in the Onam festivities in the State, the banks are often working overtime. They garner a significant portion of their credit during the season. After the initial surge in credit off-take, the repayment is most often spread through the year, as the salaried class begin to repay the loan in instalments.

It is also the season of deposits. The most significant inflow into the deposits comes from the NRIs, both from those who make it a point to visit the State and from those who cannot. The visiting NRI needs to finance his Onam purchase for his family, friends and relatives.

The NRIs who cannot visit the State has to make do with sending remittances to his family and relatives, so that the family does not miss out on the Onam purchases.

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