We have used this period to build relationships, strengthen IT systems, and developed new models, including work from home. Today the entire treasury department, for example, is working from home and doing a fantastic job. We have created a non-branch channel or Bank-in-Bank model, NEO, where the delinquency is good and stress is low.
Today, digital has become the norm. Due to the pandemic, digital penetration has advanced by 2-3 years; it would have been slower in the normal course. Digital adoption helps in reducing cost, and satisfaction levels are much more. Digital will offer the same sort of service to everyone and will increase the volume. Thanks to digital medium, in the past month, I could talk to more than 25 customers and could do 57 video calls internally despite the lockdown and travel restrictions.
How are you planning to de-risk your books?
Five to six years back, the bank’s focus was on corporate. Being a bank, we needed to gauge our appetite. We took a cautious call and decided exposure beyond Rs 125 crore will not be taken when it comes to corporate, so that if at all some unforeseen things happen we have the stamina to withstand the shock.
Now, our focus will be MSMEs
up to Rs 25 crore. Especially MSMEs
of Rs 2 crore, as there are many traders. At one point, KVB was a traders’ bank, we needed to revive these things. Here the hit is low, pricing and margins will be better. Retail will be another focus. We have digitised the process completely. Sanctions can be given in 15-20 minutes.
Today, advance book is around Rs 49,000 crore – 23-24 per cent is corporate, and 33 per cent is commercial (up to Rs 15 crore). We will not get out of corporate, but we will not participate in consortium accounts where our share is least as we will have no say. Commercial banking will increase to 35-40 per cent in 1-1.5 years and will help to diversify. Yield will go up. Current yield in corporate is 7-7.5 per cent, in commercial banking (largely MSMEs) it is around 10 per cent.
What has been the impact of moratorium?
We are working on it. We don't see any big impact.
Investors' interest in banks like yours has increased. Will you look at roping in an investor?
Our capital adequacy is in a comfortable position. Even for the projected around 8 per cent growth, we may not require any fresh capital. However, such things will be reviewed on an ongoing basis.