Why Repco Bank is unfazed by small branch network

While most banks look at rapid expansion of their branch network, Repco Bank, a cooperative bank established by the Union Government in 1969, believes that its strength is in remaining “small”.

The bank, with a branch network of 105, has confined its expansion to the four southern States. And, only in the last five years did it add about 40 branches to its network.

The older branches (numbering 65) are being given a facelift. The bank’s Managing Director R Varadarajan said that 15 older branches of the bank will be renovated every year on an estimated outlay of ₹10 lakh/branch. “We have completed 10 so far,” he said.

When asked how the bank has managed in a competitive environment with minimal network, he said: “Small is beautiful. We are able to offer quick and personalised service. Though our rate of interest is marginally high when compared to nationalised banks, the formalities for loan sanction are far less.

“Further, instead of believing the audited balance sheet of the credit seekers, our staff visits their premises to understand the requirement and ensure that the sums lent are not diverted. The assessment is made by us and no outside agency is engaged for recovery,” he added.

The bank’s gross NPA (non-performing asset) stands at 2.5 per cent of the total advances and its net NPA is “nil”, claims Varadarajan.

The bank is targeting a business of ₹14,000 crore this fiscal.

While stating that the bank’s focus is largely on jewel loans, trade finance, corporate and SME (small and medium enterprise) loans, the bank’s MD said: “Gold loans accounted for close to 30 per cent of our advances. The recent slide in the price of gold impacted our business. All those who had availed loans foreclosed the account. We are trying to compensate this by providing credit for business development, commercial building construction, and so on.”

Repco Micro Finance, a subsidiary of Repco Bank, with a network of 67 branches (only in Tamil Nadu), supported three lakh women beneficiaries to the tune of ₹1,000 crore, he added.

“This subsidiary has applied for small finance bank licence,” he said, and pointed out that the microfinance arm of Repco Bank was among the 72 applicants that have sought permission from the banking regulator to start such a venture.

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