Federal Bank focuses on retail deposit growth, achieving 19% increase: Shalini Warrier, ED, Federal Bank

India’s credit growth in FY 24 is likely to be around 19 per cent including merger impact and the bank also has grown at the same pace. Demand for credit remains strong in the country. We have a very strong relationship management network catering to commercial banking and housing loans. Business banking is largely sourced by branches and well supported by relationship managers.

We are reckoned as a strong player in the home loan segment in the leading markets like Mumbai, Bangalore etc. We are the first choice for key developers of housing loan projects in the markets in which we compete. Commercial banking and business banking remain as part of our high focus segments.

The bank has a well-balanced defined risk framework and that governs all credit decisions. We have always believed in and practised the mantra of diversification in loan books. Our asset portfolio is well balanced with 55 per cent in retail and 45 per cent in wholesale.

Within retail, our exposure to credit cards and personal loans is small, constituting only about 6 per cent of the overall retail book. Careful customer selection and robust underwriting and collection processes have helped the bank to maintain pristine asset quality consistently for many years.

Our credit architecture is governed by the principles of independence. Credit origination, underwriting, administration, monitoring and loan collections are all separate distinct units in the bank. Where algorithms and models are used, the models are subject to rigorous scrutiny and back testing before roll out. All of these help us to ensure that we continue to grow our lending book while maintaining strict control on quality. Our results speak for themselves!

In the next FY, as we increase our focus on high yielding assets, our extant risk management policies and processes will ensure balanced growth with risk control.

“Digital at the fore, human at the core” is our approach to banking in general. While ensuring we have the best of digital capabilities for our customers, we have also been expanding our branch presence. We added 75 branches in the previous fiscal and are well on course to add about 135 branches in this fiscal.

The focus is on enhancing presence in the geographies where we have less presence and where economic growth is faster. In the last two years, our branch presence has significantly increased in Tamil Nadu, Karnataka, Gujarat, and Maharashtra. Branches were added in many other states too. These are diverse markets which gives us strength to grow in different businesses.

Having been established as the dominant bank in Kerala for many decades, we hold a significant market share and a strong presence across Kerala with 600 branches. Kerala represents a high potential market for Non-Resident customers and is part of a growing sunrise economy. Leveraging our extensive network (largest), diverse product line, and quality services, we are well positioned to capitalize on the future opportunities in Kerala.

Tamil Nadu is contiguous to Kerala and expansion in this state was a strategic decision aligned with our “presence to prominence to dominance” (P-P-D) strategy beyond Kerala. In TN, we have been rapidly expanding, adding 39 branches last year and planning to add another 45-50 branches in FY 24, bringing our total branch count close to 250.

Tamil Nadu’s fast-growing economy presents ample opportunities across various business sectors, making it an ideal market for our low-cost CASA products, high-yielding gold loans, and business loans. We are also playing a significant role in providing key digital capabilities to the Tamil Nadu Government.

Our expansion strategy is not limited to Tamil Nadu. We are also actively expanding in other key states, particularly in Karnataka, Telangana and Gujarat. This approach allows us to participate in and benefit from the growth potential of these emerging economies.

While the industry at large is rapidly embracing digital on-boarding initiatives, we are on the forefront by developing our own online account opening solution using the VKYC platform for savings and credit card. We have also partnered with leading FinTech companies for large-scale on-boarding processes.

Despite the widespread adoption of digital banking, branch banking channels remain favoured by a majority of customers for full-scale operations, while also utilizing digital banking facilities such as mobile banking, digital payment solutions, and internet banking. We should also recognize that there are some products – notably gold loans and loans for small and medium business enterprises – that continue to be really branch centric only.

In gold loans, we are a key player and have many variants on offer. Ensuring trust, privacy and security is paramount when customers would like to avail gold loans and recognizing this, we have introduced specific Gold Shoppees in some of our branches. These are private spaces that offer security to customers.

The bank has built a strong reputation among NRIs and has established a seamless remittance network globally, handling approximately one-fifth of the total personal remittances to the country. These strengths position us well to offer NRI services in new geographies.