The 104-year-old private sector lender Karur Vysya Bank Ltd., popularly known as a trader’s bank, plans to regain its right to the appellation by foraying aggressively into metal loans and co-lending. Current account and savings bank accounts will be major focus areas, the bank’s MD and CEO, B. Ramesh Babu, said in an interview. Excerpts:
What was the impact of COVID-19 on operations?
Currently, transactions at the branch level remain low. Customers have started using other channels, as also KVB Dlite, a mobile banking app. Current account and savings account (CASA) contribution has gone up from 31% to 35%.
People who don’t want to spend are retaining money in their savings accounts. Account openings during the pandemic outnumbered closures.
What are your plans for the current year?
Going forward, CASA will be the top-most focus area on the liability side. So, all the branches will focus on opening mid-segment current and savings bank accounts. On the advances side, we consider loans up to ₹25 crore as corporate loans.
Earlier, we were taking exposure up to ₹200-300 crore. Now, we have taken a call to limit exposure to ₹125 crore per corporate account.
Our higher exposures have been brought down to ₹125 crore. Even today, we have about 10 accounts that are of government-owned firms and have good track record. The way forward for these accounts is, we will grow, but it will be below ₹125 crore or ₹100-75 crore.
Our main focus would be on the commercial segment which is below ₹25 crore. We have 800 branches [catering to such accounts], and we want to leverage the connect. KVB was actually a traders’ bank and had a lot of relationship banking. We want to go back to basics.
We are looking at four verticals: commercial banking, retail and non-brand channel and metal gold loans and with a lower focus on corporates. Commercial banking, retail and agriculture will constitute 75% of the loan book and corporate, 25%.
The bank will aggressively look at precious metals, that is, providing gold loans to jewellers and manufacturers.
Earlier, our customers used to take metal gold loans from other banks by using letters of credit issued by us. What we want to do is to give our own customers metal gold loan, 5 kg, 10 kg or 20 kg, whichever way they want and later extend it to others. We will import gold and give it to them, for which we have arrangement with players.
On an average, we have given ₹1,500 crore worth of non-fund base limits to our own customers. It is readily on our platter. We expect to grow by ₹600 crore on this account alone this year.
What about consortium lending?
Earlier we were a member of many consortiums. We were taking some 5% and if something happened, we had no say. That is the only reason we are seriously reconsidering; if we do not have a bigger share in the consortium, let us say 20% or 25%, then there is no point being a part of [a consortium].
But, if it is an excellent company and the concession rate is also pretty good, we can [participate] to the extent possible. But, we may not go for smaller exposures in a consortium.
We have started co-lending with a few of the systematically important non-banking, non-deposit taking financial institutions. People can enter into an arrangement wherein, they can source the loan and pass it through our own system.
The loans will be sanctioned and disbursed digitally with no manual intervention. We have tied up with seven NBFCs to take advantage of their wherewithal and footprint.
This particular route may help us to get more business.