No level-playing field between public sector banks and old private ones, says KVB chief

Come May 31, the Managing Director and Chief Executive Officer of Karur Vysya Bank, Mr P. T. Kuppuswamy, will demit office after almost a decade at its helm.

He joined KVB in July 2001 as its Executive Director and in less than a year was elevated as Chairman and CEO before being re-designated as MD and CEO, six years later in September 2008.

During his decade-long stint at KVB, he rewrote the bank's growth story by accelerating the business from Rs 6,500 crore around mid-2002 to over Rs 42,700 crore at the close of the just ended fiscal.

“KVB was an 84-year-old institution when I assumed charge as Chairman in June 2002. In the eight decades of its existence, the business volumes grew to Rs 6,500 crore, but in the last eight years or so, the bank registered a seven-fold increase in business,” the Chief Executive reiterated.

Mr Kuppuswamy started his career in 1969 as a probationary officer in Canara Bank. After serving for 32 years in a public sector bank, his started his second innings as the ED of KVB. “I took the assignment seriously; I was keen to take this institution to great heights. The bank's market capitalisation shot up to Rs 4,165 crore as at end-April 2011 from Rs 255 crore on June 1, 2002,” he told Business Line .

Excerpts from the interview:

How did you manage to take KVB to its present level?

When I joined Canara Bank in 1969, it had only 220 branches and deposits amounting to around Rs 230 crore. Over the years, deposits have swelled to over Rs 3-lakh crore and so has the branch network.

I used to motivate my colleagues here by reminding them time and again that no institution is born big. While there has been no constraint on growth, I must admit that there is no level-playing field between public sector banks and the old private ones.

Take interest subsidy for instance. Private banks don't get this subsidy. To help our customers (farmers) benefit from the so-called subsidy, at KVB, we initiated measures by giving one per cent interest subsidy from out of our profits, to those who repay their loans promptly. We found this had a beneficial impact.

We have for the first time surpassed the benchmark level of 18 per cent in agricultural advances to reach 18.83 per cent this year.

We also realised that if we do not change with the industry and grow to become a technologically competent bank, we will get eliminated in the race. We had to catch up with the tech-driven new generation banks.

How will you rate KVB on the technology front?

We introduced the Core Banking Solution in 2005 and our branch network has risen from 210 in 2002 to 370 as at end-March 2011.

We have added 477 ATMs in the last eight years to take the ATM network to 490. While we have emerged strong on technology, our differentiating factor has been the price — technology at affordable price.

Our charges are low compared to many other banks. So customers started moving to KVB. A study conducted by Boston Consultancy Group showed that we are rated on a par with new generation private banks in terms of technology adoption; nearly 40 per cent of our customers are less than 35 years of age and these youngsters bank from the comfort of their home/office.

We also do not impose any charge if the customer, for some reason, prefers to visit the branch. However, we also make it a point to educate our customers on the use of technology.

How do you ensure at least some returns on your investments on technology, considering that your offerings are affordably (lower) priced?

When we installed our first ATM in Chrompet, Chennai, eight years back, customers were reluctant to draw cash from the machine. Most of them were senior citizens.

So, we put a clerk to sit and help customers use the ATM. Today, we have five ATMs in the Chrompet area and there is phenomenal growth in savings bank balance.

We have to educate customers on the use of technology today, as we did 40 years ago — educating the illiterate to come to the bank to save money

What are the challenges that you encountered in this growth path?

We went in for an image makeover, redesigned our brand logo and gave a new direction to branding in 2003. We are a ‘Ninety Techie, young bank'.

Well, concepts such as NPA, capital adequacy and Basel norms were introduced by the regulator. We have consistently outperformed on the benchmark level. Our net NPA has fallen from 4.2 per cent in 2002 to 0.07 per cent at present.

But above all this, we had the problem of manpower attrition. In one year, we lost close to 200-250 managers. We developed an ex-gratia/incentive scheme and even offered stock options to employees to contain migration, and started recruiting from different areas. Today, about 800-1,000 people out of a total strength of 4,500 are computer-literate.

In fact, we never stopped recruiting clerical hands. We also introduced a system of fast-track promotion.

There have been reports of KVB being a prime takeover target some time back. What's happening now?

Such rumours and reports had affected our share price movement in the market. But, we have managed to overcome all such hurdles and taken the inorganic route to grow.

You must realise that there is opportunity for each of us.

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