Most branches we added in last 3-4 years were outside southern region: ING Vysya Bank chief

ING Vysya Bank wants to be a pan-India bank with a strong presence in the South. After going slow on branch expansion, the bank feels the time is ripe for it to set up 30-40 branches every year to grow its business.

Shailendra Bhandari, Chief Executive and Managing Director, ING Vysya Bank , outlines his thoughts about the rationale behind the bank’s slow expansion, focus on small and medium sector enterprise loans and CASA (current account, savings account) deposits.

Excerpts from an interaction:

In the first quarter, the bank saw a rise in slippages. Where did these come from?

There is significant stress in the economy. But we are not facing any stress in the consumer finance, SME and large corporate segments. Within mortgages, loans against properties are doing well. We are going slow, though, on the home loan segment as it is less profitable now. Also, the commercial vehicles segment is slowing, so we are a little cautious in that segment, too.

Which segments have seen rise in non-performing assets (NPAs)? How have you managed to contain NPAs in the SME segment, especially when industry is facing trouble?

The stress is neither in SMEs nor in blue-chip companies, but midway somewhere. NPAs are less than 0.5 per cent in the SME segment. We have avoided NPAs by taking hard collateral, which means either a house or showroom. We also do cash-churn analysis of the borrower’s account, which helps us to know if money will come to his account even before the borrower does.

Lastly, more than 75 per cent of our SME portfolio is not in the manufacturing sector but in the services sector, which has worked for us.

Your share of CASA has dropped this quarter. Are you looking at increasing it?

Our CASA is now at 31 per cent, from 32-33 per cent of total deposits earlier. More than half of our CASA share is in the form of current accounts.

On savings account we are paying 4 per cent but if you look at the mixture, it costs us less than 2 per cent. But yes, we are not complacent. If the economy does well, current account deposits will go up, if it doesn’t we will look at it. As for savings accounts, we will look at a variety of measures.

Does that mean hiking deposit rates?

Probably. We will look at it. I don’t think we need to. But maybe there is an approach where we can look at hiking rates on balances above a certain threshold, say Rs 1 lakh, Rs 5 lakh or Rs 10 lakh.

We have not changed any rates. However, with interest rates having gone up, the expectation is that this (liquidity-tightening measures) may last for another week of so. But if it lasts longer, most banks would have to reassess and look at hiking them.

What are your expansion plans in FY14?

We have a significant network with about 550 branches and we can continue to grow our business out of this existing infrastructure. There were about five quarters when we did not add a single branch and our topline growth was about 20-22 per cent and profit after tax grew about 35 per cent. But this was because we had idle capacity. This will get exhausted and we will add 30-40 branches every year.

You are a predominantly South-based bank. Do you plan to venture to other regions?

About five years ago, 85-90 per cent of our branches were in the South. However, over the last 3-4 years, most branches that we added were outside the southern region. So, the percentage has come down to about 65 per cent.

We will continue to be predominantly South-based but with a significant footprint across the country. We want be an all-India bank with a strong presence in the South rather than a South-based bank with little presence elsewhere.

> beena.parmar@thehindu.co.in

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