Karur Vysya Bank is piecing together a new product that is expected to revive interest in recurring deposits. The private lender is expected to soon unveil the product that will provide flexibility in deposit amount.
Many Indian banks today have reduced their focus on recurring deposit schemes as the returns are comparatively low at times of volatility in interest rates.
These deposits are mainly preferred by people who do not have a lumpsum amount to invest and instead pay a fixed amount every month.
K. Venkataraman, Managing Director and CEO of Karur Vysya BanK, admits that not many banks were giving sharp focus on recurring deposits.
“We are working on a flexi recurring deposit product that will both give us better yields and more benefits to depositors,” he told Business Line on the sidelines of a branch inauguration function here.
One of the major drawbacks with this scheme is the non-flexibility of the amount of deposit, with neither partial payment nor over payment allowed.
“Our product will have flexibility in the deposit amount. We feel small and medium traders will benefit by this product,” he said.
Venkataraman said some banks had introduced such a scheme in the past but these did not work out for some reason. “We are now trying to evaluate the reasons for this and make necessary changes in the new product,” he said.
Expansion mode
The lender, which has been restructuring its organisational set-up based on the recommendations of the Boston Consulting Group since one year, is currently on an expansion phase.
“We added 80 branches last fiscal and this year will add 100 more to take the total number to 550. About 35-40 per cent of these will be in the northern states, where we plan to increase our presence,” he said.
The bank will also be recruiting about 1,500 people, both as officers and clerks, this fiscal. It plans to increase its non-interest income by 35 per cent this year through increased credit, para-banking and insurance products.