Planning slew of measures for better customer engagement: B Ramesh Babu, MD & CEO of Karur Vysya Bank

B Ramesh Babu, the new MD & CEO of Karur Vysya Bank (KVB) has innovative ideas, backed by 40 years of banking experience including as deputy MD & COO of SBI, to drive KVB further in the growth trajectory. He is planning a slew of measures such as co-lending, widening of business correspondents’ role and centralisation of branch-level routine operations aimed at better engagement with the customers. In an exclusive interview with FE’s Sajan C Kumar, he shares his views about the century- old private sector lender and the way forward. Excerpts:

Now that moratorium period has ended, what is the feedback from the bank’s borrowers?
Close to 37% customers had opted for moratorium and now with the lifting of it, people have started coming back to the bank. Even in the corporate book, barring two to three cases, not many had been asking for loan-restructuring. In the retail segment, many of the borrowers had applied for moratorium, thinking that they can save for a rainy day, in the backdrop of Covid-triggered uncertainties relating to job losses and other issues. With moratorium period getting over, many of them are coming forward with their standard instructions and cheques and most of them are getting honoured. In the commercial loan segment, which consists of working capital and term-loans for small businesses, including manufacturers and traders, many of the customers had opted for FITL — a loan restructuring mechanism wherein the borrower of working capital loan gets a breather to repay the loan.

What will be your focus areas for advances in the future?
We will continue with the corporate loans, more or less at the same level or at a slightly reduced level. Instead of aggressively going for corporate, we will pick and choose quality and good ones. The main focus will be on commercial segment which will have small businesses, manufacturing, food processing and MSMEs. KVB has historically been a banker to small businesses and traders and we want to go back to our basic customers. The next focus will be retail, and with the digital / technology backbone the bank will be able to sanction a housing loan with no time.

Precious metal business will be another focus are as the bank has many traders and jewellers in its fold.
If you look at our loan book, the major component is commercial segment (up to Rs 25 crore loans) which accounts for 33% of the total advances. Corporate book is 25%, retail 23% and agricultural constitutes about 20%. Earlier, the bank was having focus on corporate with even amounts up to Rs 300 crore being sanctioned to entities. The board last year took a decision to restrict the maximum corporate advances at Rs 125 crore, taking into account the fact that, if some accounts go bad, the bank could be able to absorb the impact of losses.

What are the new initiatives you are planning to improve the bank’s performance?
There is scope for increasing product per customer, which will add to our income. If we increases our products offerings, more customers can be targeted. Another plan is on the cost optimisation, we are in the process of renegotiating the rentals of the branches across the four southern states where we are prominently located. We are also planning to centralise those routine operations which normally take place at the branches, thereby giving the branches enough time to engage with customers. We are also planning to increase our non-fund income, by up-selling and cross-selling of third party products.

Are there any innovations being planned at the bank, taking cues from your long-standing banking experience?
We are planning to enlarge the scope of business correspondents (BCs) by asking them to set up their own infrastructure. The scheme is that we will provide our core banking solutions (CBS) connectivity to their offices and we will be giving them fixed and variable funds to help run the unit. We have started discussions with our BC community. According to a study, while a transaction at a branch costs Rs 40, at the BC level it is just less than `15. So, it is uneconomical to open a branch for the sake of experiment, we will encourage the BCs to start their own units and if we find that there are enough transactions, we may scale up those units to a bank branch.

The bank is also going in for co-lending model aggressively wherein it will tie up with MFIs and smaller non-banking financial institutions, to reach out to the unbanked customers in villages and other remote areas where we don’t have our footprint. We are entering in tie-ups with these institutions and based on our guidelines they will identify customers for loans and other products. We have created a digital platform which will be integrated to their system. Here the biggest advantage is that once a loan is released, their team will follow up the recovery part.