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South Indian Bank(SIB) is entering its 90th year. To commemorate the occasion, it has launched a CSR scholarship scheme and distributed smart canes to 1,000 blind women across Kerala. The bank’s MD and CEO VG Mathew spoke to BusinessLine about SIB’s staff-engagement and customer relations plans. Excerpts:
Branch expansion seems to have come to a halt this fiscal. Is there a freeze or have you reached saturation?
The bank has already created a pan-India network. The present focus is on leveraging the network for business expansion through centralised marketing and processing initiatives. In high potential centres, we would like to see a cluster of branches supporting each other in business expansion and consolidation. We opened nine branches/extension counters for this purpose last fiscal. Fifteen more units are being planned for the current financial year.
Why have deposits grown at a slow pace (around 7 per cent) this fiscal, compared to about 18 per cent in the previous one?
This needs to be seen in the background of significant deposit mobilisation that happened in FY17 in the wake of demonetisation, when deposits grew by 19 per cent and advances by only 13 per cent. The moderate deposit growth during FY18 was adequate to support the credit growth of around 18 per cent.
CASA deposits have been even slower, growing at just 3 per cent...
A significant part of the CASA (current accounts, savings accounts) gathered post-demonetisation got converted into fixed deposits. Eventually, this led to the moderation in CASA growth to about 9 per cent. The position is expected to improve significantly during the current financial year on the strength of digital initiatives and centralised marketing and processing capabilities.
The proportion of CASA deposits still remains 25 per cent. What are the goals to take it further?
The targeted CASA ratio is 30 per cent by 2020. A major plank for this growth is the expansion in retail credit products, which would encourage such customers to maintain valuable CASA accounts with the bank.
POS machines are also expected to contribute significantly to the current account portfolio. Along with acquisition of more customers on the domestic side, the opening of the Representative Office in Dubai is expected to give a fillip to the NRI CASA base.
Can we expect a hike in interest rates?
A slightly elevated interest rate structure is expected during the current year.
Our MCLR has now been revised by 20 bp in line with the increase in the liability side costs.
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