IDFC Bank to speed up lending, aims to achieve goal of mass retail banking

IDFC Bank, which concluded first full year of operations in 2017, said its vision is to become a mass retail bank in five years. To support this growth, the bank plans to accelerate the pace of retail lending and retail liability acquisition.

The bank plans to double the share of its retail book, systematically bring down the proportion of the corporate-funded book, and further reduce exposure to infrastructure over the next two to three years.

The bank has commenced its banking operations with effect from October 01, 2015. The annual general meeting of bank shareholders is slated for July 28, 2017, Chennai.

In a letter to the shareholders, Rajiv B Lall, Founder, Managing Director & CEO of IDFC Bank said that un the past year, the bank has made significant progress on its objective to transform into a mass retail bank.

He said partnerships and alliances will play a critical role in this journey. Delivering banking products and solutions across networks owned by business correspondents and partners to customers will play an important role in fulfilling this vision.

"We are confident of our ability to leverage our click and mortar retail franchise and our established corporate business to take advantage of the opportunities that may emerge as the economy gains momentum; while continuing to invest in technology and human capital to support our business growth," said Lal.

The bank is planning to increase the retail share in total advances across all customer segments, pursue cost-effective acquisition at scale especially of mass affluent and mass retail customers for deposit mobilisation.

As of March 31, 2017, over 25 per cent of the bank's funded credit was 'retailised' and your bank's infrastructure concentration was lower by 15 percentage points relative to last year. Client-based fees contributed 12 per cent to its operating income.

Bank's deposits stood at Rs 40,208 crore end of March 2017. CASA deposits were at Rs 2,094 crore, which it claims it significant for a newly established bank. "This reflects your bank's strong distribution reach and ability to mobilise low-cost liabilities from depositors around the country,stregthen" said the bank.

The bank's retail businesses grew steadily and there was healthy growth in both retail deposits and loans, supported by an expanding network that remains critical to its retail franchise.

One of the key strengthen the retail portfolio is focussing the financially excluded section. This was achieved through a combination of physical as well as digital infrastructure, said the bank. Digital channel has contributed over 21 per cent of open market account acquisition. Over 20,000 customers were acquired digitally who opened more than 30,000 accounts and balances in excess of Rs 400 crores were mobilised through these digital accounts.

The bank claims it has acquired a customer base of around 1.4 million. It has a network of 8,613 points-of-presence (PoPs) across 20 states, 19 major cities, 150 districts, serving 33,000 villages across the country, including the North East.

This network includes 74 bank branches, 47 ATMs, 350 Corporate Business Correspondent branches (which include NBFCs and finance companies representing IDFC Bank for microlending), and 8,142 outlets which include MicroATMs, cashless PDS outlets and Aadhaar Pay merchant points.

The bank also acquired Grama Vidiyal Micro Finance Limited ('GVMFL'), now renamed as IDFC Bharat Limited. GVMFL had 1,502 crore of Assets Under Management, 319 branches in 7 states and over a million customers.

All employees of GVMFL have become employees of the BC. All incremental business originated by BC is being booked in IDFC bank's balance sheet.

Points to be noted 
 

Banks sell loan accounts worth Rs 2,070 crore to ARC

The Gross NPL and Net NPL of IDFC Bank were at Rs 1,542 crore and Rs 576 crore respectively. In 2016-2017, IDFC Bank sold 14 loan accounts with a net carrying value of Rs 2,070 crore to an Asset Reconstruction Company.

This helped in lowering Bank's Gross NPL ratio (as a percentage of Gross Advances) to 3 per cent and Net NPL (as a percentage of Net Advances) to 1.1%.

Clarification
The earlier headline of this story wrongly referred to IDFC Bank as IDFC. The two are different entities. The error is regretted