Stepping up lending to the retail and MSME (micro, small and medium enterprise) segments, pro-actively monitoring loan accounts, progressively shifting business to the electronic channels, among others, are engaging the attention of Ashwani Kumar, the new Chairman and Managing Director of Dena Bank.
In the process, 54-year-old Kumar hopes that his bank will regain its past glory. The Dena Bank chief is confident that his relatively younger force can make this happen. The days of chamber banking are over. People have to go out into the field to get business.
In an interaction with
Regaining past glory:
Dena Bank has got a number of advantages over other banks. Though we were late starters in technology implementation (core banking solution platform was set up in 2010), it is a major advantage now. So, if we want to float new products, it will be easier for us as we can harness the latest technology platform.
We want to be ahead in technology and we have a new technology platform to help us achieve this. Globally, transactions are shifting to the electronic mode. So, we should become a bank where a branch becomes an alternate channel and electronic channels (ATMs, Internet and mobile banking) become the mainstream channel.
Worldwide, 90 per cent banking transactions are electronic. So, I don’t know why call this channel alternate. If 90 per cent of the transactions are happening through the electronic mode and only 10 per cent through branches, then which is the alternate channel? Our focus will be to try and shift more and more business to the electronic mode. This will give the customer comfort also.
Relatively speaking, we have a younger workforce. The average age profile in public sector banks is around 50 years. But in the case of our bank it is around 44 years. As time progresses the age profile will further come down. So, this is a major strength. This young age profile of the employees will gel well with the customer demography that is emerging. It is expected that by 2020, 72 per cent of our population would be below 45 years and 65 per cent of the population will be below 35. So, demography-wise we are very well placed and people have desire to work. Lot of energy is there in the workforce.
With new technology and a young and enthusiastic workforce, you can achieve anything. So, first thing that I told them (after taking charge) is that we have to regain our past glory. At the time of bank nationalisation in 1969 we were the fifth largest bank in the country. During the course of the last four decades, maybe some aberrations took place, we slipped and now we are the 18{+t}{+h} largest bank. So, regaining the past glory is one of the major challenges, which everybody has accepted and all are working in that direction.
Based on September 2012 figures, three banks are slightly ahead of us — Vijaya Bank, United Bank of India and Bank of Maharashtra — in terms of business. Our goal is to improve our business. Consequently, if we get ahead of them, then that is good.
Business expansion:
As per our vision document, by 2017 we want to achieve a business (deposits plus advances) size of Rs 4-lakh crore. As on December-end we were at Rs 1.48-lakh crore. Some good signals are emerging in the economy, inflation is coming a bit under check, and some sentiments have improved. So, at 25 per cent annual growth, we will achieve the business target. However, vision documents should be rolling documents to account for the changes in the external environment.
I have already addressed my staff in Gujarat, Mumbai, and Delhi. I am trying to reach out to maximum number of our employees. Two good programmes are running in the bank — Dena Gaurav for clerical staff and ‘Main Hoon Na’ for subordinate staff — for orienting our staff towards customers.
When it comes to geography, we are present in Gujarat and Maharashtra, two of the most vibrant States in the country. Doing business is not difficult, if people (employees) decide to do business and they will get proper support from head-office.
In fact, I have told employees that all head-office departments will treat zonal offices (ZOs) as their customers. Correspondingly, ZOs should treat branches as their customers. We will try to measure the responsiveness of the controlling offices to the field. Ultimately, business is generated by the branches/ZOs. So, we have to support them.
Retail and MSME thrust:
One of the thrust areas for business growth is lending to the micro, small and medium enterprise (MSME) sector. We already have 21 processing centres, which process MSME loans applications, in 21 regional offices. But, I think, we have to rejuvenate them. Besides, MSME, stepping up credit to the retail segment will be another thrust area. In retail credit, there is lot of scope for housing loans, vehicle loans, loan to traders and doctors.
In MSME, we will try to ensure that we are able to give Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) cover for loan accounts below Rs 1 crore. There is lot of apprehension among employees to give collateral-free loans, though these loans are covered under CGTMSE. We want to remove the fear among employees to lend to the MSME sector.
In fact, our people are already on the job. They are putting together a collateral-free loan scheme for MSMEs. Once this scheme is rolled out and an account is classified under that scheme, then employees will feel more comfortable. Once a policy is formulated in this regard, then employees will have no fear in dealing with collateral-free loans. Further, loan application tracking for MSMEs will soon be introduced.
We have retail asset branches, which are not only financing on their own but also processing retail loan applications from other branches. We are reviewing this arrangement so that retail loans can be processed separately. Online home and car loan application and processing will be introduced. Turnaround time for loans will be very fast.
Of course, good corporates are always welcome but the thrust areas will be retail and MSME so that we have a healthy balance-sheet and risk becomes widely spread.
By March-end we are expecting 18-19 per cent growth in credit and 20-21 per cent growth in deposits.
Reorganisation:
Regarding reorganisation, two things are there: if you start from ZO level, then the bank has not been reorganised since long. Today we are having about 1,500 branches and 21 regions. A few regions are covering a number of States. We have to look into whether we need to have a couple of more zones so that the span of control is manageable.
We have got 15 lead districts. Given our focus on MSME and retail segments, the Lead District Manager (LDM) structure needs to be strengthened. Further, we may set up a separate vertical for payments altogether.
The days of chamber banking are over. People have to go out into the field to get business. Either customer comes to the branch or you go the customer. Since customers don’t want to visit branches now, so we have to go to them. Customers visit the branch only for high value advice, documentation, etc.
For liability side products, once you open a SB account, you don’t have to go to the branch. You can open fixed deposit online, do funds transfer online. On the asset side, the customer has to visit the branch for loan documentation. After that he need not come. Customer visits to branches have come down substantially the world over.
NPAs and restructuring:
As of September-end, our gross non-performing assets (NPA) ratio was at 1.97 per cent (Rs 1,170 crore) and net NPA was at 1.22 per cent (Rs 727 crore).
We will do two-three things for recoveries. We will be starting recovery camps. GM (recovery) will not be in the office. He will be in the field, helping settle accounts through one-time settlement.
Overdue in accounts above Rs 10 crore have to come to me on the day it becomes overdue without waiting for 90 days. So, monitoring mechanism is being tightened.
Account monitoring is happening down the line without waiting for 90 days’ overdue. If you start asking for repayment from the day it is due, then you have 90 days to pursue the customer.