Shamrao Bank in ATM talks with other co-ops

With the Reserve Bank of India (RBI) making it difficult for co-operative banks to expand their branch network "" a fall-out of the Madhavpura Cooperative Bank scandal "" Shamrao Vithal Co-operative Bank (SVCB) will be the first to tie up with other co-operative banks to share its current 22-strong automated teller machine (ATM) network.

It is equally not averse to working with other private sector and foreign sector banks in an attempt to expand the reach for its customer base.

"We are looking at tying up with co-operative banks to share the ATM network and are in talks with two-three other banks in this respect," said SVCB chief executive officer Deepak Patil.

Currently, SVCB has 38 branches and four extension counters operating only in Maharashtra, Goa and Karnataka. This limits customers' ability to access their accounts when they are in other parts of the country.

"Customers would not mind paying a small fee for the use of ATMs outside these states," added Patil.

Patil was speaking on the occasion of SVCB signing a bancassurance tie-up with Bajaj Allianz General Insurance Company here today in Mumbai for the sale of non-life risk covers.

It also proposes to sign-up with ICICI Prudential Life Insurance Company for selling life insurance policies.

With a total business size of Rs 2,700 crore in terms of advances and deposits, SVCB anticipates that it will sell at least 4,000 insurance policies in the first year.

"Net of all expenses, we expect a net profit from this fee-based income to the tune of Rs 1.15 crore," said Patil.

The bank clocked a net profit of Rs 33 crore in the nine months ended December 31, 2003. On a total loan book size of Rs 1,100 crore, the bank opines that assets close to Rs 2,500-2,600 crore come up for renewal in the current quarter.

Bajaj Allianz chief executive officer Kamesh Goyal said currently about seven per cent of the company's premium income amounting to Rs 25 crore comes through the bancassurance route.

As on December 31, 2003, the private non-life insurance company clocked a premium income of Rs 340 crore.

"The share of premium through the bancassurance route is expected to increase to 10 per cent next fiscal. While banks have a large loan book, large customers do not necessarily go through banks in purchasing insurance as they have own insurance cells and arrangements," said Goyal.

Sam Ghosh, country manager of Allianz, added that striking bancassurance tie-ups was a challenge as the Insurance Regulatory and Development Authority did not allow banks to pressurise their customers into buying risk policies from particular insurance companies despite their tie-ups.

Though the average premium was low, the volume in terms of policies sold through this channel was high, added Goyal.