We aim to modernize, improve workforce productivity: Salee Sukumaran Nair

Nair in an online interaction with Shine Jacob, outlines his vision for the Tamilnad Mercantile Bank

Salee Sukumaran Nair recently took charge as managing director (MD) and chief executive officer (CEO) of Tamilnad Mercantile Bank. Nair, a former deputy managing director of State Bank of India (SBI), in an online interaction with Shine Jacob, outlines his vision for the Thoothukudi-headquartered bank. Edited excerpts:

 

What will be your top priorities heading one of the oldest banks in the country?

 

This is a legacy bank and significantly operates on manual terms. What we are trying to do first is modernise it and improve workforce productivity so that our business growth can move to the next trajectory. We are focusing on strengthening our credit architecture by centralising the credit processes into 12 specific locations, with an apex body managing it. The purpose of this is to move credit operations out of the branches.

 

Today, branches handle the entire range of operations, making it challenging to focus on specific areas, particularly deposits. We are refocusing on branches with regard to deposit management to ensure that the deposit franchise is strengthened. This is only possible if credit operations are moved out. The credit management centre will oversee all retail areas, excluding jewel loans. These centres will have marketing personnel, relationship managers, and appraisers, surrounded by a 'feet on the street' team.

 

You mentioned deposit growth strategy. What is it?

 

We want to strengthen our deposit franchise. Our NRI business was relatively weak, comprising only 4 per cent of our deposit base. We aim to increase this to at least 10 per cent within a year and a half. To achieve this, we are establishing a global NRI centre, likely in Kerala, to attract NRIs in areas where Indians are concentrated. This is part of an effort to extend beyond Tamil Nadu's borders and should be operational within a few quarters. We will also focus on transactional business, aiming to attract traders and micro, small and medium enterprises (MSMEs) by catering to their needs, like cash pick ups, managed by a central unit. The bank is analysing how our internet and mobile banking is performing compared to peers and we aim to match them. This will help reduce customer costs in dealing with the bank.

 

What is your outlook on deposits and advances? What are your branch expansion plans?

 

We are performing well on profitability and revision ratios. The impact of these structural changes should become evident by next year. For the current year, advances may grow by 13 per cent, while deposits should grow by around 7-8 per cent. By next year, we anticipate significant changes in both areas. We have 567 branches, with 417 located in Tamil Nadu. Out of the 40 new branches, we plan to open this year, we have already opened 15. Currently, only seven branches are loss-making, excluding the new ones. We aim to build a local presence in branches outside Tamil Nadu, hiring around 178 from other states.

 

The Reserve Bank of India (RBI) recently flagged irregular practices in gold loans and asked lenders to take remedial measures. How are you addressing this?

 

Gold loans constitute a significant part of our portfolio. It is around Rs 15,000 crore in an overall portfolio of Rs 45,000 crore. 

 

We are mindful of what the RBI has said. We have internalised RBI caution to the banks. We are closely monitoring the loan to value (LTV). We will fully comply with the RBI guidelines. It is a portfolio that is growing substantially. Credit monitoring centres are introduced to take the focus away from gold loan and rebalance the portfolio and bring back the focus on MSME.

 

What are your capital expenditure plans with an increased focus on technology? Do you have any fundraising plans?

 

We are looking aggressively at technology and are hiring 47 for this. On the capex side, we are looking at spending around Rs 100 crore in the current year, only for IT. Our fundraising will largely be anchored by deposit growth. Apart from that, we are also diversifying into refinance. We have a significant priority sector portfolio of 77 per cent. Some of this is open for refinance. This is something that we will be leveraging to raise substantial funds. We will also test the waters for securitisation, in some of the portfolios like car loan or housing.

 

The share of retail, agriculture, and MSME in your portfolio is at 92 per cent. What is your strategy regarding this segment?

 

Credit management centres will also manage MSME accounts. We are layering MSME relationship managers based on ticket size, allowing them to acquire skills to handle larger credit. For the next one year, we aim to maintain RAM at 90 per cent, till we acquire the skills to manage larger ticket sizes.