Kolhapur-headquartered Ratnakar Bank plans to tap the capital market with a ₹1,000-crore initial public offer in the current fiscal on the back of robust growth in business and profits over the last three years. Vishwavir Ahuja, Managing Director and CEO, who initiated the exercise to transform the old-generation bank into a modern one nearly four years back, said the bank’s approach is not to open branches or ATMs unless the existing ones make money. Excerpts :

How has your transformation journey unfolded so far?

We have been three-and-a-half years now into our transformation journey. In some aspects our transition has been smooth, while on some others we are still working. We aim to grow in the 30-45 per cent range annually. Also, the focus will be more on bottomline as we come closer to the IPO stage (later this fiscal).

How has your bank performed in FY 2014?

In July 2010, when I joined the bank, we inherited a balance sheet (deposits and loans) of ₹2,200-2,300 crore. We will close FY 2014 at about ₹18,000 crore against a balance sheet size of about ₹13,000 crore as on March-end 2013. Our goal is to reach a business size of ₹30,000 crore in three years, and take CASA (current account, savings account) to 22 per cent (from 20 per cent now).

Which areas of lending are you focusing on?

When we look at the large corporates, we don’t look at direct lending. Since my base rate is higher, I am uncompetitive and they need lower interest rates. In the ecosystem of large companies, we lend to their partners, such as vendors or distributors. Their linkage to the large corporates mitigates our losses. We are the bank for the middle class anyways, and that’s how we have managed to keep the NPA levels low.

In the past one year, where has your growth come from?

The corporate book has grown. We have exceeded the priority sector lending (PSL) requirement — all of it was direct lending and no loans were bought out. Our agriculture and SME portfolios, too, have grown.

What are you doing to differentiate your bank from competition?

We are taking a cluster approach. We go to one area, become part of that neighbourhood and add four to five branches there so that there is enough presence and we give everything the customers want. We are seeing retail deposits grow in these areas.

What is your branch expansion plan?

We ended FY 2014 with about 175 branches. We added about 50 last year but now we will slow down as we want to make the existing branches profitable first. This is our DNA, we do not proceed before making money. It should not be a dead investment. It takes 18-22 months for the branch of a big bank like HDFC Bank to break even. We try within the same range, and because we are a small bank, we want to make it profitable first. So, we will add about 20 branches this year; but ATMs, we will add 100 more this year.

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