‘Retail loans should grow by at least 10% this year’

Syndicate Bank expects business growth this year to be not much different from what it clocked last year. While the public sector bank (PSB) has seen good traction in loans to micro, small and medium enterprises (MSME) and the priority sector in 2014-15, it is behind the curve on CASA (current account, and savings account) deposits and retail loans. Arun Shrivastava, MD and CEO, said his bank will leverage its vast network of around 3,550 branches to improve CASA deposits and retail loan composition. In an interview with BusinessLine , he observed that capacity building is the biggest requirement for the organisation. Ultimately, excel sheets alone do not make the balance sheet; it is the people who make the balance sheet. Excerpts from the interview:

What are your business targets for FY16?

We should be able to grow at the same pace at which we had grown last year. In the coming two-three quarters, as for all banks for us also asset quality will definitely be a challenge. In some of the large sectors where we have exposure, asset quality will be a challenge. However, we have significant exposure in agriculture and MSME where we don’t see such a challenge.

In the current year, we would be increasing our branch network by about 355 branches. About 75 per cent of these will be opened in unbanked and rural areas.

In the MSME and priority lending sector, we will continue to achieve the mandatory targets comfortably. We have a big presence in Karnataka, Andhra, and western Uttar Pradesh and we will be able to do well with the agriculture and the MSME portfolio.

In FY16, our advances growth will be around 15 per cent and deposit growth 15-20 per cent.

While most banks have clocked good growth in retail loans, how come it was only 6 per cent for your bank in FY15?

On the retail loans front we will have to streamline our systems and processes a bit a more. When we could do well with MSME loans (25 per cent year-on-year growth), we can do well in retail also.

We would like to reduce the turnaround time for retail loan sanctions. This matters most in the retail segment because pricing and other things remain the same. By having tie-ups with builders for home loans, with car dealers for car loans, etc., we will probably see a significant improvement in retail loans this year.

We have automated the processes. So, turnaround time in decision-making has been streamlined and we are focussing more on retail. So far the strategy (on retail loans) was probably not there. Greater focus now will give us good results. This year, retail loans should grow by 10 per cent at least (last year it was 6.36 per cent). We have structured products, be it for retail or MSME segments. It is easy to market these loans.

How is the demand for loans from corporates?

No significant new proposals have come. Those coming are either for refinancing or for enhancement in the limits where exposure has already been taken.

How long will the slack in corporate credit demand last?

At least two to three quarters. This quarter we did not see any enhancement in corporate credit. No new proposals have come up. In the road sector also no new projects have come up.

Wherever we have an exposure, either they (borrowers) are coming for enhancement (of past limits), or disbursements which have already been committed are happening, or under the new the 5/25 scheme (where long-term loans, say of 25 years, to projects in infrastructure and core sectors are periodically refinanced at intervals of five years).

Despite having a fairly large branch network, why is your CASA relatively low, at 28 per cent of deposits?

Yes, I agree that our CASA percentage is quite low compared with other banks. Probably there was no thrust on getting these kinds of deposits. But, going forward, we will place emphasis on getting accounts, such as pension accounts.

Most of the issues are because our presence is mostly in Karnataka and Andhra. The common strategy for CASA is you provide good customer service, and you have good product offerings. We have devised some products for individuals, for ladies, for minors, and for Gen-Nxt customers. So, probably these products will pick up and CASA will improve.

How are you dealing with the challenge of superannuation of experienced employees?

In the latest round of recruitment, we have taken about 1,500 officers. We have also taken an equal number of clerks. So, we have recruited more than the number of employees who will be retiring in the current year for the simple reason that these people will be getting trained in a year’s time and will be roped into mainstream banking.

Then we have about 400 candidates who have joined a nine-month diploma course and are undergoing intensive training. After the diploma, they can directly join the bank.

Within the existing system, we have chartered out intensive training, especially in the area of MSME loans, for about 800 credit officers. This is to reduce the skill gap. All our seven training institutions and the apex college will roll out two-week training programmes for the officers. And we have identified one general manager exclusively for learning and development.

Capacity building is the greatest requirement for the organisation, because ultimately balance sheet is not made of excel sheets (alone), it is the people who make the balance sheet.

COMMENT NOW