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Stepping Up of Lending to Agriculture, Small Industry and Business
Interview with S.K. Mitra, President & Zonal Head, Eastern Zone, Kolkata

We are keen to know the rationale for your bank’s changing its name from UTI Bank to AXIS Bank.
This indeed was a major challenge for us as the Bank had done well with the UTI brand name. However, today there are several entities using the UTI brand that creates certain amount of brand confusion. Hence it was felt worthwhile to invest in building a brand name which would help the Bank create a distinct brand identity for itself, reflecting the enhanced aspirations of the Bank as it gears up to take off on a multinational stage. The choice of the name Axis Bank is determined by the need to create a brand that has global undertones transcending geographical boundaries, reflects a well aligned, organized, tech-savvy entity and conveys an edge in terms of dynamism, power and influence. In terms of customer relationship, the core idea connoted by Axis is that the customer is the fulcrum around which the Bank revolves, offering 360-degree service to cater to all kinds of customer needs. The rest of the Bank remains the same, where one can continue to experience the same dedicated personalised service and professional expertise, as always.

Graphically, in the new logo, the first stroke depicts forward growth while the second stroke signifies a solid support system. The two thick strokes also connote solidity and security.

How do you view the Indian banking sector’s significant progress since nationalization?
After nationalisation of major banks in India in 1969, there was a significant expansion of branch network to unbanked areas and stepping up of lending to agriculture, small industry and business. More recently, the focus is on establishing to affordable basic banking services with emphasis on financial inclusion.

The period 1969 to 1991 saw a huge increase in the branch outreach in India as the average population covered by a bank branch fell from 64,000 to 13,711. In 1991 along with reforms for liberalizing and opening up of the economy, financial sector reform aimed at deregulation, increased competition and revitalizing the banking sector through recapitalisation and adoption of prudential measures.

The reform process brought in its wake a set of new generation private sector banks. Ever since the banking industry in India has literally been revolutionized. The new genre of private sector banks have successfully engineered a competitive environment in the whole banking industry. Today the nationalized banks compete for business with the private banks as fiercely as the private banks do with the foreign banks with a whole lot of resultant benefits passing on to the customers. Another major development was that almost all the major banks, including Government owned banks have been able to reduce the level of NPAs very significantly. It is quite satisfying to note that today the health of Banks in India is much superior to that of China.

What is your assessment of the current situation in the banking industry in India?
The banking industry in India appears to be poised for another round of revolution. As the economy grows at a steady pace of 9% plus, the banking industry also has to gear up to support the massive growth being witnessed all across. The opportunity is huge and Indian banking industry ought to leverage the same and reach commanding heights in the process.

What are the key issues facing banking sector today?
The key issues faced by the banking sector in India are the following:
  • Raising capital to fund growth
  • Meeting Basel II norms
  • Beefing up Risk Management and reducing NPA & maintaining low NPA levels
  • Financial Inclusion
  • Attaining Global size
  • Manpower support for achieving desired growth.
  • Attaining global standards with respect to products & services.

With about 60% of the population without bank accounts, the banking industry faces both a huge challenge as well as an opportunity. The industry can grow manifold by reaching out to the rural masses.

The PSU banks, which own about three fourth of the total assets of the banking industry face the daunting tasks of raising capital without reducing Government’s stake. The Government needs to quickly bring about a solution, either through legislative changes or some innovative resource-raising programme.

With the opening up of the banking sector in 2009, we are likely to see entry of foreign banks and also strengthening of hold of the existing foreign banks, when the sector is allowed to have more foreign shareholding. This may bring about major changes, with far reaching impact. This is likely to result in some ‘shaking up’ in this sector resulting in ‘phasing out’ of the weaker players. It will be something like Darwin’s ‘survival of the fittest’.

How do you look at the future of Indian banking sector?
Indian Banking system has played a crucial role in the socio-economic development of the country. The system is expected to continue to be supportive and sensitive to the growth and development needs of all the segments of the society.

Our banking system is transparent in its dealings and has well adopted global best practices in accounting and disclosures driven by the motto of value enhancement for all stakeholders.

It is expected that the Indian banking will be more competitive in times to come. For this the market players will have to be financially stronger and operationally more efficient. Capital is always a key factor in building a successful institution, which will be engaging the attention of bank managements. The banking and finance system will improve competitiveness through a process of consolidation, through merger and acquisition and strategic alliances.

Technology would be key to competitiveness of banking system. Indian players are expected to keep pace with global leaders in the use of banking technology. In such a scenario, on-line accessibility will be available to the customers from any part of the globe through ‘Anywhere’ and ‘Anytime’ banking. 

What would you advise your customer to be the best way to manage money?
We would like to advise our customers to take investment calls based on clear understanding of the risk return matrix. They must have very clear investment objectives in mind, which should define the investment horizon as well as take care of the short term and long term cash flow requirements of the Customer with appropriate risk appreciation.

Since investors do not get adequate time to do this exercise themselves, we suggest that they should take the help of Investment Advisors (IA) to draw up their investment plans and make investments accordingly. We, in Axis Bank have trained IAs, based at our Branches to assist the investors. We also have a Wealth Management Team, which advises the high networth investors on the basis of detailed research on the market trends, industry as well as company wise analysis. Finally customers must always try to have a balanced portfolio, comprising of various maturities and class of assets like, real estate, equity, mutual fund, govt. bonds, bank deposits, gold and other liquid investments.

What are you doing about ensuring top of the shelf service at AXIS Bank?
At Axis Bank, we give the highest importance to customer service. We believe effective customer service not only helps deepening relationship and maintaining existing customers, it also triggers fresh customer acquisition. We conduct periodic review of customer services provided by branches by independent external agencies. We keep improving our service standard by taking cue from the results of customer service surveys. Most importantly the performance of our staff at branches, including that of the Branch Heads is judged by the level of customer service provided amongst other parameters.

Apart from the human part of it, we also endeavor to effect improvements in the systems, process and the technological platform as also product innovation to offer better customer service. Our customers are central to all our strategic planning. Indeed, we look at ourselves as a ‘people’s bank’ with solutions for a life-time as our motto.

What has been your experience on the lending side in this Region?
Our loan portfolio has doubled itself over the past two years. Our focus on different      segments likes retail assets, SME & Agri and large corporate through separate business units has resulted in healthy growth across all the segments. All the three lending channels have developed sizable and quality portfolios with attractive yields. One of our focus areas has been to increase non-fund based exposures, which has helped us immensely in growing our fee income level. The Credit Deposit Ratio (CD ratio) has moved up upto 46.27% in 2006-07 from a level of 39.15 in 2004-05. The Bank crossed the milestone figure of Rs 1000 Crores in Priority Sector lending in the region on 31st March 2007. We have set up a number of dedicated Agricultural Clusters at places like, Midnapore, Arambagh, Siliguri, Cuttack, Raipur etc with dedicated agricultural specialists to boost our agri lending portfolio. We have also set up dedicated SME Cells at Guwahati, Jamshedpur and Bhubaneswar apart from Kolkata to focus on SME and Priority Sector lending.

How do you plan to increase your share of retail credit?
The Bank has set up a series of Retail Assets centers (RAC) throughout the country to focus on the retail segment. In Eastern Zone, apart from Kolkata, we have RACs at Bhubaneswar Jamshedpur, Durgapur, Guwahati, Raipur, Ranchi and Cuttack.  RACs provide one-stop solution to our retail clients. The Bank has launched four-wheeler financing which has started attracting large number of Clientele because of the competitiveness of the product.

Please tell us about the expansion plans of the Bank specially in the semi urban and rural areas of the region.
Our Branch network in the Eastern Zone has trebled over a period of last three years. A large number of Branches has been set up in Orissa, Bihar and Jharkhand apart from the North-east where we have the largest network among the new generation Banks. We have plans to go to the Districts where we do not have presence. Recently we have opened our branches at Purulia, Bankura, Coochbehar, Raiganj, Malda, Balurghat, Gaya, Suri etc. in West Bengal and other States. Our Bank recognizes the need to reach out to rural and semi urban centre which are identified as future growth centres and which would also help the Bank to reach out to the target segments in the priority sector advances such as Agriculture, Small Business and Small Scale enterprises. Eastern Zone has taken major initiative in expanding branch network in the NorthEast and presently we have presence in all the North-Eastern States, except Manipur With the opening of our Imphal branch during the current fiscal, we would be present in all the States in the Indian Union.

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