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| VIJAYA BANK | |||||||
| Small Can Grow Big and Become Stronger | Interview with Prakash P. Mallya, CMD, Vijaya Bank | ||||||
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Vijaya Bank celebrated its Platinum Jubilee during the year 2006. Could you please tell us something about the origin and evolution of the Bank? Vijaya Bank is one of those banks of
South India to have originated from the Coastal District of South
Kanara in Karnataka, hailed as the cradle of Indian Banking. It is the
youngest of four Public Sector Banks of today to have hailed from the
District and has a legacy of banking enriched by banks like Canara
Bank, Syndicate Bank and Corporation Bank, which too have their origin
in the district. The Bank was founded in the year 1931 by Mr. A. B.
Shetty - a freedom fighter and a leader of eminence - alongwith others
from the enterprising ‘Bunt’ community. It was not exactly a smooth
sailing thereafter. There were anxious moments during the Second World
War and the subsequent global economic turmoil, but the Bank had enough
resilience to stand up to these challenges and grow bigger. Along the
way, nine smaller banks got merged with Vijaya Bank and the process of
consolidation got a big boost under Late Mulki Sundar Ram Shetty, who
as Chairman during the sixties till late seventies expanded the branch
network and ensured the presence of the Bank in every State and Union
Territory of our country. The Bank was nationalized in April 1980
when it had total business of around Rs.800 crore.
The Post- Nationalization era was full
of challenges and achievements. Bank continued its policy of growth
with consolidation during these years. Business of almost Rs.52000
crore and around 370 branches was added during these 26 years. Several
new initiatives were also taken to ensure that the bank moved ahead
with times. It adapted itself well to the winds of change brought about
by liberalization and raised Public equity of the face value of Rs.200
crore and share premium of Rs.140 crore in two tranches.
It is a kaleidoscope of wonderful images
and hard work that comes across as we recount the laurels earned by the
Bank during these years. Awarded the Business Standard Bank of the Year 2004
and with business of almost Rs.54000 crore, the bank is now stronger
than ever, as it enters the beginning of another milestone. The reward
should go to all the stakeholders in the Bank and not the least, to our
seven million accountholders and 11500 staff members.
What according to you are factors, that differentiates Vijaya Bank from others? Though there are many which come to my
mind, I will just mention two or three. Vijaya Bank is often
mentioned as a smaller Public Sector Bank, but the fact is that it is
also among the youngest. At 75, not many of our banks had posted a
business size of almost Rs.54000 crore which we did as of December
2006. What drives the business in Vijaya Bank is the atmosphere of
cordiality among staff and the sense of commitment and perseverance to
achieve the results expected of them. Customer satisfaction in Vijaya
Bank is hence a philosophy and not just, a part of banking manual.
Secondly, to quote our Honourable
Finance Minister from his speech during the valedictory function of our
Platinum Jubilee Year celebrations, Vijaya Bank is small; and small is
beautiful. But small can grow big and become stronger. Well, it
is a matter of pride growing big and by crossing the Rs.50000 crore
business barrier we are already a mid-sized bank. And we are strong
too, and that will certainly help us grow bigger.
Thirdly, Vijaya Bank was founded by
agriculturists and even to this day retains a strong focus towards
rural development and agriculture. 434 out of the 950 branches, that is
almost 46 % of the branches of the Bank are located in Rural and
Semi-Urban centres. Credit to Priority Sectors of the economy
account for 43.60% of the Net Bank Credit of the Bank
Agriculture Credit continues to grow at a rapid pace and more than
doubled during the last couple of years. Bank had surpassed the target
for both Agriculture and SME lending during last fiscal and has the
potential to grow further, harnessing its strength in rural and
semi-urban centres.
How do you see going forward from here? What is your vision for the Bank? Well, we have very clear goals and
sincerely try to achieve them. We had set a Platinum Jubilee business
target of Rs.50000 crore for September 2006 and have actually
over-reached the target by achieving over Rs.51500 crore. My immediate
next goal is a business size of Rs.60000 crore by March 2007, which I
want to take to Rs.75000 crore by March 2008 enroute Rs.100000 crore by
March 2010, if not by March 2009. Keeping in view our traditional
moorings and the emerging potential in rural and semi-urban sectors, I
have also set appropriately high growth projections for key sectors
like agriculture besides SSI and SME.
Our goal of increasing the number of
branches from the present 932 to 1000 by March 2007 has got a boost
with the fresh authorizations we have received from RBI recently. I
expect similar approvals to come forth for opening our overseas
offices. On the technology front, we have planned to enhance our Core
Banking Business Coverage to over 80% through 500 outlets by March
2007. We have also planned to increase the number of our net - worked
ATMs to 250 by the end of current fiscal.
I must mention that lot of thinking and
planning has gone into these projections and we are committed to see
that they materialize. As a banker, let me also assure you that we
shall always keep raising the bar, and growth in Vijaya bank is a
continuous process.
There has been the buzz around about consolidation and strategic alliances in banking sector. Is Vijaya Bank up to something? I have always maintained that Vijaya
Bank will talk about consolidation from a position of strength.
We appreciate that size matters and we are quite happy with the way we
are growing. There are benefits of economy of scale inherent in
bigger organizations. New ideas are always welcome and if something
comes our way, we shall examine them. As for strategic alliances,
we have on-going service specific tie-up with banks who use our network
for payments and services.
Coming to more concrete alliances, I
have been in informal discussions with some banks. Such alliances will
be of help in certain specific areas for mutual advantage of banks
involved, but when it comes to working out the nitty-gritty, such
working relations are sustainable only upto a level. I am
therefore willing to approach the matter differently and with a
positive frame of mind.
In an environment where Banks make less and less of what they sell to customers, they need to work closely with external partners. To do so, Banks must ease process integration and data flow with external partners. What is your Bank’s take on this? A look at the history of Vijaya Bank
will tell you that the Bank has always pioneered the introduction of
new products and services – be it ATMs, Credit Cards, Capital Market
Service Branches and so on. In the recent past, the Bank has forayed
into newer territories such as marketing of Mutual Fund and Insurance
products with ease. Diversification into these and other new areas has
become a necessity due to the increased attrition level of customers
and the narrow spread levels, with which the banks are now accustomed,
to operate. I believe that Banks will have to closely work with other
channel partners to increasingly derive the benefits from these new
lines of businesses. Data sharing and process integration is also
the need of the hour to maximize the benefits to the collaborating
Institutions.
India is changing. Increasing affluence, growing middle class, large presence of younger generation with their expectations and aspirations. How is Vijaya Bank geared to meet the demands of this large segment? Vijaya Bank is gearing up to the needs
of the market. Bank was among the first few public sector banks
to implement Core Banking Solution and the system has taken roots. Net
Banking and Phone Banking are on the cards. On the products side, apart
from the traditional products, we have forayed into marketing of a host
of investment products like Mutual Funds, Government bonds, Insurance
and other businesses to give the customers the convenience of Banking.
We are closing the gaps towards becoming a one-stop shop for all the
financial needs of all categories of customers including the youth.
Do you think that, retail banking is the key tool for banks to strengthen the customer base, given the growing consumerism? What according to you are the safe routes for Banks to move forward in retail banking? There is an increase in credit-led
consumption and the Banks have to make investment in increasing their
retail business. The market is growing at a rapid pace and there
exists immense potential for banks. The success of retail lending
would depend on the quality of credit analysis, credit management,
collection process, maintenance of database and most importantly the
adherence with KYC norms.
What better role banks can play in servicing the retail banking customers? Do you think banks have to be more imaginative, technology-centric and forward looking towards meeting the retail needs of new generation customers? I believe that banks should move towards
‘Convenience Banking’ covering a gamut of services such as payment of
bills, transfer of funds etc. With the changing
demographics, Banks would have a large number of younger customers who
are less patient. We need to make it convenient for them to make their
financial transactions. Further, there is huge scope for offering
financial planning advice, given the level of ignorance that exists
about financial products in the market today.
Do you think market research is the key to identifying the customer need and preferences in retail business? Market research is a key success factor
in a competitive market. Research should aim at identifying the
customer, his needs, his expectations. Banking industry does not
easily allow us to leverage product differentiation for competitive
advantage. It is therefore necessary for us to build higher degree of
service differentiation through identifying customer needs and
expectations. Bankers have a special feel of the pulse of the market
and customers, and they get accustomed to customer needs and
preferences, that much faster.
It is said that the present generation prefers to do banking through cards and has no time to visit the bank branch. Do you agree? I belong to a different school of
banking, which believes that the customer at our premises is the king.
I believe in interacting with and understanding my clients and knowing
them personally. There are modern conveniences, which aid the banking
processes but not the banker – customer interaction. Though many may
differ, the sight of the banking hall filled with customers, doing a
variety of transactions is a sight to behold and in my view, the
customer who walks in to greet and enquire your well being is the
greatest asset for any bank.
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| RNI No.
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