 "We have the technology to counter competition: L D Rewatkar")
Over the last decade, banks have transformed themselves from brick-and-mortar entities to include anytime-anywhere banking through the use of computers and smartphones. Union Bank of India (UBI), one of the country's largest public sector banks, has a wide presence in Uttar Pradesh, in both urban and rural areas. UBI General Manager L D Rewatkar speaks to Virendra Singh Rawat about the bank's future plans in the state. Edited excerpts:
Indian banks are plagued by non-performing assets and are making provisions to write them off and start afresh. What is the status of UBI in Uttar Pradesh?
Growing NPAs in the banking industry are causing concern to all bankers. The reasons are many but asset quality is the top reason for such a poor performance. The other reasons for high stressed assets are the global slowdown, fall in domestic demand, policy logjam, disputed contracts, poor credit appraisal, weak risk management, all debt-no equity, promoters chasing quick growth, a number of large projects having run into difficulty, step-down entities, high leverage, etc.
How is UBI performing in the area of financial inclusion, which mandates commercial banks to open no-frills accounts?
We have done fairly well in financial inclusion. In the initial stages, we had opened accounts in seven districts of UP, allotted to us as lead districts, namely Jaunpur, Ghazipur, Azamgarh, Mau, Chandauli, Sant Ravidas Nagar and Varanasi, through carpet coverage of villages with population of 2,000 and above. Thereafter, no-frills accounts were also opened in villages of other districts allotted to us. After the implementation of Jan Dhan Yojana, we have opened over two million accounts in UP. Besides, we are providing financial services in 6,940 villages allotted to us.
Can you throw some light on UBI's current branch network in UP and its expansion plans over the next 12 months?
Union Bank had 922 branches in UP as of end-December 2015, of which 674 branches are located in rural and semi-urban centres. We opened nine 10 new branches by March 2016. With this, our total number of branches in UP increased to 932. During the current fiscal, our endeavour will be to increase this tally to 1,000.
UP has been bifurcated into two zones for administrative efficiency and proper control. Eastern UP is under the field general manager's office, Varanasi, comprising six regional offices - Varanasi, Azamgarh, Ghazipur, Jaunpur, Allahabad and Gorakhpur. Central and western UP and Uttarakhand are under the control of field general manager's office, Lucknow, comprising five regional offices - Agra, Kanpur, Lucknow, Meerut and Dehra Dun.
Within these 932 branches, there are nine service branches which look after back office operations and eight Union Loan Points, which exclusively cater to the retail loan portfolio. Besides, we have 11 currency chests, a Staff Training Centre, zonal audit office and zonal vigilance cell. At the special State Level Bankers' Committee (SLBC) meeting convened in January 2013, the Reserve Bank of India Governor had referred to the shortage of 3,000 bank branches in UP according to population ratio. Later, SLBC allotted centres for opening of branches to all banks. We were allotted 204 centres for opening branches and we opened 234 branches in the state.
The state government has been urging banks to increase their credit exposure in the priority sectors. What is the credit deposit ratio (CDR) of Union Bank in UP and how does it compare with other large banks?
The credit exposure of banks in UP under the priority sector is not at the desired level. The issue is regularly discussed at the SLBC meetings by the government and the RBI, while banks are directed to improve their exposure under the priority sector.
In view of the low CDR in various districts, SLBC had formed a sub-committee under UBI in 2010 to look into reasons and suggest correctives. Owing to sustained efforts, the CDR of all banks put together as of December 2015 was 55.51 per cent. All banks are putting in their best efforts to further improve the CDR, so that the desired level as per the expectations of RBI and the state government is achieved. The sub-committee selected 16 districts with CDR of less than 40 per cent for review in March 2015, which came down to 12 in December 2015. There are only five districts with CDR of less than 30 per cent in UP, and efforts are on to get them to quickening their pace of credit growth, so that they also contribute in increasing the CDR.
Our CDR in UP has gone up from 53.73 per cent (March 2015) to 55.29 per cent as of December 2015. Our CDR is slightly lower than the overall CDR of all banks, because in four out of five districts where the CDR is less than 30 per cent, we are the lead bank. These four districts - Jaunpur, Ghazipur, Azamgarh and Mau - do not have scope for financing other than agriculture. However, there is still great scope for improvement. The positive factor is that our market share in both deposits and advances has gone up, from 4.40 per cent to 4.70 per cent and from 4.35 per cent to 4.89 per cent respectively.
The RBI has issued banking licences to new financial services entities. How is Union Bank gearing up for the competition in the near future from these new banks, which have so far been working in the rural areas in the microfinance space?
RBI has given its nod to some financial services entities for setting up banking business in the country and these new banks will definitely have their expansion programmes in UP also. As many as 17,570 branches of 46 banks are operating in UP and our bank also a strong presence with 932 branches. There already is stiff competition among banks, and opening of branches by these new banks will definitely add to it. The only way to counter the competition posed by these new banks is through creating delight for the customer, which will prompt him to keep coming back to us for all his financial needs.
Proactive measures will be taken to implement, monitor and deliver excellent customer service, which will reinforce our customer's faith in our tag line, 'Good People to Bank With', and inspire him to exclaim, 'Best People to Bank With'. Moreover, we have the human resources and the technology to back our endeavour, which can be termed as among the best in the industry.
UBI has bagged six banking technology awards from the Indian Banks Association - Best Technology Bank of the Year; Best use of Digital Channels and Technologies; Best Use of Technology to Enhance Customer Experience; Best Risk Management, Fraud and Cyber Security; Best Financial Inclusion Technology Initiatives; and Best Payment Initiatives.
What is the business size of Union Bank of India in UP?
The total business of Union Bank in UP has gone up from Rs 69,047 crore (March 2015) to Rs 73,968 crore (December 2015), registering a growth of 7.13 per cent.
Mobile commerce is a new and growing segment for both mobile phone companies and banks. The segment holds tremendous untapped business opportunities in terms of low-value payments for services. What is Union Bank's road map?
Union Bank is one of the best banks from the technology point of view. We have the U-Mobile facility and Interbank Money PAYMENT SYSTEM (IMPS). With the help of U-Mobile and IMPS, customers can transfer funds to any person or organisation. We have E-cash through which our customers can make cash payments to non-customers also by using mobile numbers and ATMs. Our bank has launched one of the latest products, Digi-purse, in which any person (non-customers also) can download the application from Google Play Store in his/her mobile and make utility payments/bill payments and purchases of up to Rs 10,000 per month.
All these services are free of cost so far. We provide services like mobile passbook, stop payment instruction, cheque book issue, etc through mobile banking. We have introduced a scheme - 'Union Selfie' - a mobile app-based scheme, through which anyone can open an account of their choice without visiting a branch. UBI is alive to the situation and has introduced many schemes under this segment, with many more to come in future.
Indian banks are plagued by non-performing assets and are making provisions to write them off and start afresh. What is the status of UBI in Uttar Pradesh?
Growing NPAs in the banking industry are causing concern to all bankers. The reasons are many but asset quality is the top reason for such a poor performance. The other reasons for high stressed assets are the global slowdown, fall in domestic demand, policy logjam, disputed contracts, poor credit appraisal, weak risk management, all debt-no equity, promoters chasing quick growth, a number of large projects having run into difficulty, step-down entities, high leverage, etc.
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Although the position of stressed assets is crucial in our economy, in UP, our bank is in a better position compared to its peers. Our NPAs have come down from 5.08 per cent (March 2015) to 4.97 per cent (December 2015). Besides, we have not written off any loan other than agricultural advances, that too through a scheme announced by the Centre.
How is UBI performing in the area of financial inclusion, which mandates commercial banks to open no-frills accounts?
We have done fairly well in financial inclusion. In the initial stages, we had opened accounts in seven districts of UP, allotted to us as lead districts, namely Jaunpur, Ghazipur, Azamgarh, Mau, Chandauli, Sant Ravidas Nagar and Varanasi, through carpet coverage of villages with population of 2,000 and above. Thereafter, no-frills accounts were also opened in villages of other districts allotted to us. After the implementation of Jan Dhan Yojana, we have opened over two million accounts in UP. Besides, we are providing financial services in 6,940 villages allotted to us.
Can you throw some light on UBI's current branch network in UP and its expansion plans over the next 12 months?
Union Bank had 922 branches in UP as of end-December 2015, of which 674 branches are located in rural and semi-urban centres. We opened nine 10 new branches by March 2016. With this, our total number of branches in UP increased to 932. During the current fiscal, our endeavour will be to increase this tally to 1,000.
UP has been bifurcated into two zones for administrative efficiency and proper control. Eastern UP is under the field general manager's office, Varanasi, comprising six regional offices - Varanasi, Azamgarh, Ghazipur, Jaunpur, Allahabad and Gorakhpur. Central and western UP and Uttarakhand are under the control of field general manager's office, Lucknow, comprising five regional offices - Agra, Kanpur, Lucknow, Meerut and Dehra Dun.
Within these 932 branches, there are nine service branches which look after back office operations and eight Union Loan Points, which exclusively cater to the retail loan portfolio. Besides, we have 11 currency chests, a Staff Training Centre, zonal audit office and zonal vigilance cell. At the special State Level Bankers' Committee (SLBC) meeting convened in January 2013, the Reserve Bank of India Governor had referred to the shortage of 3,000 bank branches in UP according to population ratio. Later, SLBC allotted centres for opening of branches to all banks. We were allotted 204 centres for opening branches and we opened 234 branches in the state.
The state government has been urging banks to increase their credit exposure in the priority sectors. What is the credit deposit ratio (CDR) of Union Bank in UP and how does it compare with other large banks?
The credit exposure of banks in UP under the priority sector is not at the desired level. The issue is regularly discussed at the SLBC meetings by the government and the RBI, while banks are directed to improve their exposure under the priority sector.
In view of the low CDR in various districts, SLBC had formed a sub-committee under UBI in 2010 to look into reasons and suggest correctives. Owing to sustained efforts, the CDR of all banks put together as of December 2015 was 55.51 per cent. All banks are putting in their best efforts to further improve the CDR, so that the desired level as per the expectations of RBI and the state government is achieved. The sub-committee selected 16 districts with CDR of less than 40 per cent for review in March 2015, which came down to 12 in December 2015. There are only five districts with CDR of less than 30 per cent in UP, and efforts are on to get them to quickening their pace of credit growth, so that they also contribute in increasing the CDR.
Our CDR in UP has gone up from 53.73 per cent (March 2015) to 55.29 per cent as of December 2015. Our CDR is slightly lower than the overall CDR of all banks, because in four out of five districts where the CDR is less than 30 per cent, we are the lead bank. These four districts - Jaunpur, Ghazipur, Azamgarh and Mau - do not have scope for financing other than agriculture. However, there is still great scope for improvement. The positive factor is that our market share in both deposits and advances has gone up, from 4.40 per cent to 4.70 per cent and from 4.35 per cent to 4.89 per cent respectively.
The RBI has issued banking licences to new financial services entities. How is Union Bank gearing up for the competition in the near future from these new banks, which have so far been working in the rural areas in the microfinance space?
RBI has given its nod to some financial services entities for setting up banking business in the country and these new banks will definitely have their expansion programmes in UP also. As many as 17,570 branches of 46 banks are operating in UP and our bank also a strong presence with 932 branches. There already is stiff competition among banks, and opening of branches by these new banks will definitely add to it. The only way to counter the competition posed by these new banks is through creating delight for the customer, which will prompt him to keep coming back to us for all his financial needs.
Proactive measures will be taken to implement, monitor and deliver excellent customer service, which will reinforce our customer's faith in our tag line, 'Good People to Bank With', and inspire him to exclaim, 'Best People to Bank With'. Moreover, we have the human resources and the technology to back our endeavour, which can be termed as among the best in the industry.
UBI has bagged six banking technology awards from the Indian Banks Association - Best Technology Bank of the Year; Best use of Digital Channels and Technologies; Best Use of Technology to Enhance Customer Experience; Best Risk Management, Fraud and Cyber Security; Best Financial Inclusion Technology Initiatives; and Best Payment Initiatives.
What is the business size of Union Bank of India in UP?
The total business of Union Bank in UP has gone up from Rs 69,047 crore (March 2015) to Rs 73,968 crore (December 2015), registering a growth of 7.13 per cent.
Mobile commerce is a new and growing segment for both mobile phone companies and banks. The segment holds tremendous untapped business opportunities in terms of low-value payments for services. What is Union Bank's road map?
Union Bank is one of the best banks from the technology point of view. We have the U-Mobile facility and Interbank Money PAYMENT SYSTEM (IMPS). With the help of U-Mobile and IMPS, customers can transfer funds to any person or organisation. We have E-cash through which our customers can make cash payments to non-customers also by using mobile numbers and ATMs. Our bank has launched one of the latest products, Digi-purse, in which any person (non-customers also) can download the application from Google Play Store in his/her mobile and make utility payments/bill payments and purchases of up to Rs 10,000 per month.
All these services are free of cost so far. We provide services like mobile passbook, stop payment instruction, cheque book issue, etc through mobile banking. We have introduced a scheme - 'Union Selfie' - a mobile app-based scheme, through which anyone can open an account of their choice without visiting a branch. UBI is alive to the situation and has introduced many schemes under this segment, with many more to come in future.