Andhra Bank is bullish on the retail segment and is working on products that are tailor-made for its customers. It is also tweaking its customer relationship management technology to identify customers' banking history including their paying capacities. The bank has 17.5 million customers.
The move is part of its efforts to win back the customers that the public sector bank lost to private banks in the retail segment. The retail segment accounts for 12.52 per cent of the total advances, which stood at Rs 44,911 crore by the end of June this year.
“It is easy for us to reach out to our own customers than to find and nurture new customers,” said Andhra Bank chairman and managing director RS Reddy.
The bank is targeting to lend Rs 6,215 crore to the retail segment in the second quarter of which, it has already lent Rs 6,175 crore. During the June quarter, it lent Rs 5,627.09 crore to the retail sector, an increase of 27.9 per cent over Rs 4,399.5 crore during the corresponding period last year.
“Though the returns on the retail advances would be faster, it would increase the cost of transactions,” Reddy said.
The bank is giving special thrust on nonagricultural gold loans and is also making the facility available at those branches, which earlier did not offer the product . "People are seeing gold as a viable investment option,'' Reddy said. The bank had lent Rs 850.57 crore by June in this segment this year, up over three-fold from Rs 250.5 crore during the corresponding period last year.
Among others, it is also seeing a steady demand for housing loans. "The individual housing sector has not seen a fall in the demand. It is the bigger and new housing projects that have been affected due to the slowdown,'' he said. The salaried class is driving the demand for the house loans with an average ticket size of Rs 15 lakh. However, the demand for bigger loans above Rs 30 lakh, particularly from IT professionals, has declined due to the recession.
As of June 2009, the bank disbursed housing loans worth Rs 2,373 crore, up 16.4 per cent, as against Rs 2,038.66 crore in the same period last year.
Loans for consumer durables too increased 23.46 per cent to Rs 243.62 crore by the end of June this year as compared with Rs 197.32 crore. "Clean loans, given based on the future salaries, are steady," Reddy said. Till June this year, the bank gave Rs 561.07 crore as clean loans as against Rs 570.07 crore last year.
However, educational loans, which stood at Rs 1,489.3 crore till the end of the first quarter, are a concern for the bank. “Job loss and difficulty in getting new jobs will result in some defaulting. The bank is giving extension to some to repay the loans while some are covered under liability insurance. Some restructuring is needed in this sector,” the chairman said.
The bank has started eight specialised retail credit centres for retail loans.
