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Exciting and Challenging
Interview with T. S. Narayanasami, CMD, Indian Overseas Bank

What is your assessment of the current situation in the Banking Industry in India?
An exciting and a challenging phase. Exciting because the Barriers of nation and transnational banking is vanishing. For a financial institution, which is responsive to client needs, virtually there will be no limiting factors. Challenging because it needs for intensive reeducation in terms of updating knowledge, acquisition of new skills and above all, change in the mindset.

How do you view the Indian Banking sector’s significant progress since nationalisation?
Nothing short of phenomenal. Not specifically in terms of numbers of branches alone or explosion in terms of the penetration into rural segments. But, also referring to the multifarious functions, which have been assigned to the banking system, especially the public sector banks and how they have mastered the new responsibilities. Yet another spectacular change has been in terms of the introduction of technology, especially in the last decade.

Where does Indian Banking sector stand compared to the international banking sector?
Any comparison is risky. Comparisons have to be done between units operating under a level playing field. Having said that we should appreciate the Indian Banking sector that has acquitted itself reasonably well. Our market share has not crumbled even after many of our foreign counterparts started operating in our soil. On the contrary, they are being given a run for their money even by the “so-called-conservative” Indian Banker.

What are the key issues facing banking sector today?
  • Need for higher financial inclusion
  • Ensuring that the benefits of electronic banking are enjoyed by the smallest of customers
  • Greater focus on operational risk management to mitigate the rising number of fraudulent transactions
  • Strict implementation of KYC/AML measures
  • The implementation of BASEL II accord, more so for Banks having operations abroad
Which are the thrust areas for banking sector in India?
Mostly on the lines of the answer to Question No. 4.

How do you look at the future of the banking sector in India?
Bright. However, it depends on how we tackle the issues outlined in the answer to question no. 1. There is also a distinct possibility of a shake-out resulting in greater consolidation, especially among strong and strong banks.

What will be the future strategy of Indian Overseas Bank?
We have initiated certain Organisational development interventions, which have helped us exhibit a growth of 42% in the last 18 months:
  • Market segmentation
  • Opening of FGM offices
  • Opening of representative offices in China, Malaysia
  • Entry into para-banking: Bancassurance, mutual funds, retail sale of gold coins
  • Strategic alliances: MOUs with SIDBI, IIFCL, TIIC Joint Venture with Allahabad Bank and others
  • Retail loan processing centres
  • Senior citizen counters
Each of these steps has given us the dividends we hoped for. We will be looking at more such initiatives. Before the year-end, we shall be acquiring Bharat Overseas Bank Limited into our fold. In fact, it will be a homecoming as this bank is historically an offspring of IOB.

What would you advise your customer to the best way to manage money?
The key strategy has to be a trade off between liquidity and long-term growth. Depending on the financial position, need and risk appetite, each of us have to align the investment. Savings balance for cash requirements, fixed deposits for wealth accretion/hedge against inflation depending on the savable resources. Sufficient insurance to take care of your family. Mutual funds and precious metals for people with higher risk appetite.

What are you doing about improvement of service of Indian Overseas Bank?
We are tackling this vital issue from various dimensions:
  • Introduction of new products designed to provide the customer with tailor-made solutions to his requirements.
  • Technological improvements to give prompt, accurate and friendly service.
  • Initiatives like 12 hour banking, special branches for Hi-tech agri and sme branches, senior citizen counters.
  • Above all, a continuous process of inculcating attitudinal changes in the minds of our staff to enhance the traditional values of courtesy and politeness. Ultimately an empathetic staff member is our best brand ambassador.

How do you see the Banking Industry in 2010?
A difficult question, even for a futurologist. However, certain broad patterns are evident. India will have lesser number of larger banks: Branch banking will become mostly redundant, as 95% of the transactions will be done through electronic channels. Banks will be financial supermarkets where a person can order and receive his choice of financial products.

Priority Sector credit targets have not been met in many cases. What is the reason behind it?
As far as our IOB is concerned, we have consistently delivered on social commitments. We go much beyond the numbers required and imbibe the spirit of the governmental directives. As far as banks, which trails behind the goals are concerned, a limiting factor could be their branch network, lesser representation in rural and semi-urban areas. 

What about the recent activities of Indian Overseas Bank?
Covered under the earlier questions no. 7 and 9.

Any comments on the Government Policy?
The policy initiatives have been fine-tuned to be pro-active, to tackle problems, even as they are emerging. Governments at State and Central levels have been transparent and they have taken bankers into confidence as to the reasons behind the initiatives and guidelines.

Have you any observations on other issues?
Nothing specific.

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