The Hindu Business Line : `Not in race for cutting home loan rates'

THE Chairman and Managing Director of Andhra Bank, Mr B. Vasanthan, conceded that there was a `mad race' for housing finance with banks undercutting the interest rates. "But we are not in this race," he told Business Line.

Excerpts from an interview:

How do you think you can withstand the competition in the housing finance segment?

The customer/borrower is not looking at rates alone. He is looking at service too. And this is where we are trying to position ourselves — `excel in service' and I do not think that this will make much of a dent in our portfolio.

Our rates are reasonable. We charge interest at 9.25 per cent (daily diminishing) for a 5-year loan of Rs 5 lakh. Interest varies depending on the loan tenure, up to 10.5 per cent for a 20-year loan.

The specialised housing finance branch head will have sanctioning powers up to Rs 5 lakh. Application for financial support for sums beyond this limit will be forwarded to the zonal office. Basically, these branches would give a thrust to the middle-income group and for this segment, the support (Rs 5 lakh) is reasonable.

How many such specialised branches (to cater to the housing segment) are you planning to have?

We are not looking at housing finance branch per se. Incidentally, AB Housing, a subsidiary of the bank has since been merged with Andhra Bank. A few more formalities are to be completed for everything to be in place. Apart from the focus on home loans, what would be your major thrust area?

Trade finance is another potential area that we would focus on. We are planning to open 50 trade finance centres in the bank itself.

These centres will have sanctioning powers of up to Rs 10 lakh.

On ATM, its sharing and networking of branches?

We have 180 ATMs at present, all networked. We propose to operationalise another 45 before the close of the current fiscal. Our ATMs are compatible for Visa cards too.

On sharing, I will say, that we would like to be a fast follower. Before jumping the gun, we would like to test the system.

We have 1,089 branches. Without exception, all these would be totally computerised by March 31, 2003. Initially, we are planning to inter-link all our branches in Hyderabad, numbering about a hundred by June 2003. We propose to replicate this in other centres before December 2003.

How about the rural branches? Are you planning to inter-link them as well? What about the unviable branches?

We have identified about 25 unviable ones (no break-up) in the rural, semi-urban and urban centres. Obviously they will have to go, but subject to the guidelines in force. In the case of rural branches, we will probably have to work it out with some other existing bank (branch) in that region, but we are for rationalising the branch network.

Are you planning to re-deploy the work force in the unviable branches or is there any VRS in the offing?

They will be redeployed. However, the bank's HRD cell has taken up the manpower exercise. In case of excess, we propose to initiate action for rationalising the work force.

What about marketing of insurance products?

We have a corporate agency tie-up with United India Insurance Company for marketing their products. We will rush into action by April. Sale of mutual funds products also is on the cards.

Article E-Mail :: Comment :: Syndication

Stories in this Section
5-year at 6.25 is money spinner

Income on accrual basis — RBI order helps project lenders save Rs 2,000 cr

Canara Bank ATM facility in Kovai

Year-end concerns override Budget euphoria — Selling pressure on gilts may continue

National Insurance, Allahabad Bank join hands

`Not in race for cutting home loan rates' — Mr B. Vasanthan, CMD, Andhra Bank

AP urged not to enhance control over co-op banks