‘Maintaining quality of asset is important'

Every officer at Karur Vysya Bank's corporate office in Karur, a small town in southern Tamil Nadu, was talking about achieving business volume of Rs 51,000 crore on a cold mid-December morning last month. But the bank's Chief Executive and Managing Director, Mr Venkataraman, had a different take. He said, “We could have easily crossed this mark, but the market situation is such that we have to be a little cautious on the asset side. While the mood is upbeat, I should say that we are slightly behind our own internal target.” He went on to add, “Chasing numbers is not as important for us as maintaining the quality of the asset.”

Taking off on that note, we questioned him about his bank.

Excerpts from the interview:

In today's context, can you say that chasing numbers is not important, particularly when every bank is doing this?

Numbers are important in the sense that unless you have a goal, and chase it, you will not know at what speed you are chasing it. We are not trying to go extra fast. We are growing at the same pace at which the bank has been growing when our business volumes touched Rs 25,000 crore, Rs 30,000 crore, Rs 45,000 crore even Rs 50,000 crore. We don't want to accelerate too much. We want to be more cautious about the quality of assets. It is easier to do numbers, but in the process we may miss the risk factors. This can be more dangerous. Our focus is on growth with profit and quality.

Does it mean that you are going slow on corporate advances?

Earlier, we were bullish on corporate advances. But now, we are extremely cautious because the risk factors of mid-corporates and medium-sized companies have increased because of economic conditions.

Have economic factors compelled you to revisit and revise the business target?

No, we didn't have to do that. We are going slightly slow. At the present pace, we should be able to achieve Rs 55,000 crore by March. The last quarter is generally faster (busy season) than the preceding quarters.

How would you compare the December quarter of the earlier fiscal with the corresponding quarter this year?

The last two quarters are generally considered busy, but this quarter has not been as good as the corresponding period of the earlier year because of high inflation and high interest rates. This was not there last year. Further, the rupee depreciation and euro crisis is also having some impact on our markets here. I expect better liquidity and moderation in rates during the January – March quarter. Though not bullish, I am expecting the last quarter of the current year to be better than the third quarter.

What do you think are the challenges for smaller banks going forward?

The challenge is in emerging big and strong; Growth is the challenge. There are challenges in network expansion; we have got to carefully expand in some areas and here we cannot compromise on the profitability and business potential.

Human resource is another challenge. Employment opportunities, unlike in the past, are huge and opening up. A job aspirant has equal opportunities across a wide range of industry; he/ she can actually choose where he wants to work. In our days, a bank job – even a clerical post at that was considered very good. Now, it is one among others; not all that coveted as it used to be 25- 30 years back. That sheen is lost and several other jobs that do not require very specialised skill offer the same kind of reward/return. The demand from other sectors is creating problem for manpower in banks.

But aren't engineers, management graduates and others with specialised skills joining the bank as compared to say three years back?

Opportunities are immense these days. Package is what matters at least at the start. They then start exploring career prospects and growth, either in the same organisation or some other bank

With many qualified candidates in the fray and the industry's increasing requirement, how do you ensure the integrity of the candidate?

Integrity is of paramount importance in a bank job. It is the trust that builds up the bank/organisation. That's why the bank frauds are treated very strictly. Even the RBI does not spare us if there is a delay in reporting a fraud. People are watched. Yet, there have been cases of fraud. We deal with integrity issues very strongly.

What are your strategies towards retention of staff?

We give them good growth prospects, good package; this is something we have to balance. The growth prospects give ambitious plans. For smaller banks, which are on an expansion spree, the growth prospects are huge. There is ample room for recognition because the team size is still small. We are giving employee stock options. Not an ESOP kind of a thing, but something similar. We have successively given bonus shares and rights shares as well. Our market cap has doubled in the last couple of years.

lnr@thehindu.co.in

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