Expanding the network of branches and business correspondents is high on the agenda of Indian Overseas Bank (IOB). M. Narendra, Chairman and Managing Director of the bank, sees financial inclusion as an opportunity for the banking sector.

In a recent visit here, Narendra spoke to Business Line on various issues, such as financial inclusion, branch expansion, and human resource developmen.

Edited excerpts from the interview:

Recently, your bank opened some financial inclusion branches. What is unique about these branches?

These branches are interrelated ones for managing business correspondents. They will act as the nodal branch for certain number of business correspondents spread over several villages. The one opened in Tamil Nadu recently covers around 15 villages.

These business correspondents need a person who will help them in account opening and issuing smart cards.

This person in such branches will tackle issues with vendors in relation to handheld devices or outsourcing issues. We have 3,000-plus business correspondents. They need a focal point where they can meet, and tackle issues related to them.

Unlike ultra-small branches where a person goes at a pre-determined time, these branches will provide service on a regular basis.

How many such branches will be opened?

This is a model. Once this model is accepted, we will open around 100 such branches next year onwards.

How has your performance been on the financial inclusion front?

Right now, we have around 60 lakh financial inclusion accounts. The transaction level in these accounts has also increased. The balance in these accounts is around Rs 400 crore. Of these accounts, around 50 per cent are fully operative.

The Direct Benefit Transfer programme of the Government has been making good progress in Andhra Pradesh, Puducherry and Kerala. The money coming under such programmes has generated good balance in the accounts, and the transaction level has gone up.

Our bank has got more than 500 rural development officers.

They can also utilise business correspondents’ service in a much better way for recovery, getting the due-diligence of the customers done, and in reaching out to them at an appropriate time.

Tell us about your branch expansion plans?

This year we have already opened 200 branches. On our founder’s day on February 10, we will be opening 78 branches and 78 ATMs. Another 400-500 branches will be opened during the next financial year.

What plans do you have for human resource development in the bank?

We are giving training to our staff in, among other areas, credit, forex and risk management. We have a budget of Rs 6-7 crore for training. There is a need to train the staff in specialised areas too. Foreign exchange, for example, is a dynamic subject.

There is a need to give them continuous updates. Like any other growing institution, training and development are important for us.

What about your overseas expansion plans?

Recently we opened two branches in Sri Lanka. By March, we will open our second branch in Bangkok.

It is being furnished. We are trying for licence in other places. We are also looking at Dubai.

Are ATMs a loss-making proposition for banks?

In the last 10 years, the alternative delivery channels have undergone changes and have now come to a facility stage.

Still, location-wise, some of the ATMs have a long way to go. That is why the Finance Minister has said that all branches will have to have on-site ATMs.

ATM transaction, per se , is costly as we have to provide for guards and safety gadgets, and undertake cash replacement. It has to be seen in totality, that is, where my customers are getting the service and what is my alternative cost.

For my own customers’ transactions it is okay. But when my customer uses another bank’s ATM I have to pay. In the current costing, where we have to invariably provide guards, there is a need to look at things afresh.

ATM is a necessity and it is business developmental activity.

It will also act as an alternative delivery mechanism that will reduce operational costs. So, we need to utilise these channels much more effectively.

vinayak.aj@thehindu.co.in

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