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Adopting ‘4Cs’ strategy has paid off: Central Bank ED

LN Revathy Coimbatore | Updated on January 23, 2018

B K Divakara, Executive Director, Central Bank of India





Difficult times might seem to be over for the Mumbai-headquartered Central Bank of India, but its Executive Director B K Divakara says “it is not completely over yet”. In an interview with Business Line, Divakara said that the bank had embarked upon 4Cs approach last year, which had resulted in improving its performance significantly at the close of the just-ended fiscal.

“A total business of ₹4.5 lakh crore at the end of March 2015 was indeed a milestone achievement, notwithstanding the turnaround in the bottom line. We had in the process demonstrated that whatever happened during the earlier fiscal was only temporary phenomenon. Going forward, we need to tread carefully and ensure that we do not repeat the past mistakes,” he said. Edited excerpts:

Where do you think you went wrong?

We analysed internally and adopted 4Cs strategy, which aimed at controlling Cost, improving quality and monitoring of Credit, preserving Capital and improving Customer satisfaction. This seems to have paid off.

We focused on rebalancing the books by embracing RAM (Retail, Agriculture and MSME). Added to that, we incorporated “I” (robust Information technology) and “M” (effective credit Monitoring), to make it RA(h)IM. With these strategies, we have been able to overcome the setback seen last year.

Do you think this is enough? What are your plans going forward?

Now, to supplement the 4Cs formula, we have adopted the 4Rs strategies (laughs adding – Being a management student, I am fond of using these terminologies).

The 4Rs imply – Regaining lost customers, Reviving inoperative accounts, Retaining existing customers (a main challenge) and Rebalancing the books.

We have reduced our share of corporate credit to 49 per cent from 63 per cent, but registered 23 per cent growth in retail advances, 27 per cent in MSME credit and growth in agriculture advances as well.

So, the year 2014-15 was a year of consolidation for us. We wanted to concentrate on profitability and productivity. Now, we have demonstrated that the setback was a temporary phenomenon, we want to focus on business expansion and growth.

Are you looking at branch expansion?

Branch expansion is actually going slow because we are intent on controlling cost.

Last year, we added about 100 branches to our network. Will look at a like number this year too, and only at locations that offer business potential.

Actually, there are no restrictions. Earlier, in our anxiety to expand, we opened branches everywhere. Now, we are selective.

What about capital adequacy?

Comfortable for the present, but going forward, we will need to raise capital from the market. That is also being parallely worked out.

How much capital are you planning to raise?

We have an in-principle approval for raising ₹2,800 crore during the current year. It will either be through Qualified Institutional Placement or tier-I bonds. Nothing finalised yet, but the modalities are being worked out. We do not know to what extent the government will support us, but are hopeful of some support.

What do you see as a challenge at this point in time?

Asset quality continues to be under pressure. It needs to be seen in the next couple of quarters and so is raising capital from the market, because the requirement is huge.

Published on May 15, 2015

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