 "Lakshmi Vilas Bank to go for revamp, boost lending vertical")
Under its new management, private sector lender Lakshmi Vilas Bank (LVB) has decided to re-invent itself and become more aggressive in lending as well as in the deposit aggregation space.
"We are gradually changing the way we have done things; we are a 90-year-old bank and we have been frightfully lazy till now. It has run successfully so far, but times have changed, and we have to keep up with it. So, we are re-inventing ourselves, and are calling it LVB version 2.0," said Parthasarathi Mukherjee, managing director & chief executive officer, LVB.
In this new avatar, the bank is looking at revamping its backend operations and technology framework. Apart from this, the lender has also created specific businesses to look at specific verticals.
Mukherjee added that another problematic area for the bank had been its low current and savings account (Casa) deposits and now the focus would be on strengthening this low-cost deposit base. Over the next five years, the bank wants its Casa to cross the 25 per cent mark. At the end of the quarter ended September, the bank's Casa stood at 17.31 per cent.
In order to drive Casa, the management has asked the bank's branches to focus on the daily average balance of these accounts and not follow just year-end targets. The branches have been directed to focus mainly on deposits while a separate team has been asked to look at lending operations.
On the retail lending front, the bank is using technology to identify potential customers. "We are focusing on business analytics and want to be more data-driven in our decisions now. We have a business analytics group that is working with us to help us identify customers who at the moment are paying EMIs (equated monthly instalments) to other banks. We can then approach our customers and ask them to transfer the loans to us," said Mukherjee.
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The bank is also looking at hiring a specialised agency to assess its risk management framework to ensure that bad loans can be kept under check. At the end of the quarter ended September, the net non-performing assets (NPA) of the bank were 1.87 per cent, compared with 1.01 per cent in the corresponding quarter a year ago.
Going ahead, the bank also aims to strengthen its focus on the retail and small & medium enterprises (SME) segments and reduce focus on the corporate book. At present, 45 per cent of its total loan book is corporate. Over the next few years, the management wants this share to be reduced to 25 per cent and the share of retail and SME loans to grow.
The bank is also looking at raising capital within this financial year, as its capital adequacy ratio was low, at 10.10 per cent, at the end of the quarter ended September. "We have an enabling resolution to raise up to Rs 600 crore but I am looking for some quality investors that will add value to the bank, so it is taking time," said Mukherjee.