Mr Arun Kaul, the Chairman and Managing Director of UCO Bank, on Saturday exhorted his employees to go after customer acquisition in order that the bank is, well, able to survive.

The bank is a laggard when it comes to low-cost deposits (or CASA, short for current account savings account) — 24 per cent of total deposits.

There was no reaction from the 500-odd UCO Bank employees when Mr Kaul asked them, “Do you know the CASA of State Bank of India?”

Then he answered it himself — 48 per cent. The highest in the industry is HDFC Bank — 51 per cent. Most public sector banks have CASA of not less than 35 per cent. “How can we survive?”

Without much cushion from low-cost deposits, the bank is unable to go to the market for bulk deposits (that cost more), and the inability to raise resources hampers growth.

Mr Kaul's message was candid. Noting that most of the branch work (such as credit appraisal) had been taken away from branches and put in the hands of back-office or specialised hubs, he said that the job of the branch was to go after customer acquisition.

Going by the way Mr Kaul depicted the problems of the bank, it was clear that UCO Bank is an entity with its feet stuck in the past. The main reason for the bank's low CASA is the low customer base. For a bank that has 3,200 branches, it has only 1.30 crore customers. Compare this with, say, Union Bank of India, which has 2,700 branches and four crore customers, Mr Kaul posited to his employees.

When you compare with a larger competitor, say SBI, which has 25 crore customers, the handicaps of UCO Bank become starker.

The feet-in-the-past syndrome came out in the light when an employee asked why, when most banks needed only identity proof for opening an account, UCO Bank needed introduction from an existing customer. (Incidentally, Know Your Customer norms do not insist on introduction.) Mr Kaul replied that the bank's procedures for opening accounts are being overhauled.

But there are many other illustrations that confirm this syndrome — the bank has only 600 ATMs; took to core banking software (that enables a customer to transact from any branch, as the computing is centrally done) only a year ago — long after its competitors did; and is the only bank which requires a guarantee for giving a car loan.

Mr Kaul truly bared the diseased entrails of the bank when he noted that HDFC has 12 branches in Gurgaon (an industrial suburb of Delhi), while the 60-year-old UCO Bank has only two. The biggest branch of HDFC there has a business of Rs 5,000 crore, while both the branches of UCO do Rs 200 crore.

Will facilitate change

Mr Kaul, who has a good five years of service before he retires, has promised change. The management will do everything by way of facilitating. It will, for instance, have in place over 3,000 ATMs in the next two years — five times as many as now.

It will protect loan sanctioning officers from unnecessary charge-sheets — a move that was necessary as the bank has seen too many officers charge-sheeted for loans gone sour.

It will mend rules to make business easy — such as for opening accounts or giving, say, car loans. Loan sanctioning will be put in the hands of specialists operating from hubs to lift the burden off the branch-level staff.

It will ensure better communication. Lack of proper communication, top-down, bottom-up and lateral, Mr Kaul diagnosed, was a fundamental problem in the bank.

On his maiden visit to Chennai, Mr Kaul's message to the employees was simple: Just go and get more customers.

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