 "Arun Tiwari")
Arun Tiwari, about to complete 42 months as chairman and managing director of government-owned Union Bank of India, to Abhijit Lele on current challenges. Edited excerpts:
Union Bank has been able to report net profit for all quarters during and after the Asset Quality Review in 2015-16. Beside handling of stressed accounts, did limited exposure to large-ticket cases also help?
Correct. Always at the back of my mind is the prescriptive limits for single party exposure or sector exposure. The single party limit might be Rs 5,000 crore but for a particular borrower we might not go beyond, say, Rs 1,000 crore. We have to be prudent in decisions. We don’t have to take exposure up to the Reserve Bank’s set limit.
Are we still struggling to find a solution for resolution of stressed assets?
If 10-12 coaches of a train get derailed ,it takes time to get these back on track. Being in an out-of-sync situation for three-four years, the curation period will also be longer.
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We are now in the last fortnight of the first quarter of the current financial year. Broadly, how were these three months in terms of performance?
During my tenure, look back at every quarter. We have stuck to the guidance (forecast) that we gave. Last year, growth in the MSME (micro, small and medium enterprises) portfolio was about five% for the sector but our bank’s grew by 8.5%. The combined share of retail (individual), agriculture and MSME in the total loan book was around 37% three years ago. It is now 54-56%.
How has the use of data analytics helped in business operations?
We have been able to monetise our data for business purposes. Suppose I have 100 lockers in a branch, with 35 vacant; at the same time, I have the number of savings bank accounts, where the average balance is Rs 25 lakh and above, and I see the bank has not given them a locker facility. Giving them this facility brings ‘stickiness’. That is, they maintain their account with the branch. In the process, the lockers are lent out.
If bank has to do a campaign for a mutual fund subsidiary, I know through analytics where it is possible to deploy the least possible input for better results. The leads are pushed through and the branches are monitored for response. It works.
Being in a position where the buck stops, what is your takeaway from managing a large services sector entity like a bank?
Large organisations are run by people. It is confidence and trust of the rank and file in the management at every level that matters. The differentiator has been that I have experimented a lot. Two critical positions in banking are branch manager and regional manager. If you are able to choose the right type of people at these levels, things will happen automatically.
About three years earlier, we shortlisted 26 of the youngest among assistant general managers out of 300-odd. The bank decided to make 24 of them regional managers. All of them have done exceedingly well. Generally people want to stay away from a regional manager’s position. It is a tough call. In Union Bank, managers are lining up to be regional manager.
You have one of the lowest in risk weighted assets. Is that part of deliberate practice?
Every loan proposal from a branch has to key in data to make sense on whether the transaction would be profitable. Every loan proposal coming to the central office has to have on the first page information about how much is the capital charge on it and what would be the earning. If it is less than that, we don’t do business. Ghatega, sauda nahi karma (if we lose, no business).
Does all this mean you are ready to take other banks into your fold?
If two plus two is greater than four, it makes sense. If it is four or less than four what for? Size? Only size does not matter.
Mergers will and should happen. The first round should be for horizontal mergers. Nobody would like it if we are talking about mergers among good banks or well-run banks. Equality should be not only on the basis of balance sheet but also on financial parameters.
An important aspect is that they be on the same information technology platform. If that is the case, integration will be easier. This should be the first check box. Then comes treasury, followed by the corporate book. If we are asked tomorrow that a particular bank would be merged with you, I should be broadly ready with the framework. The bank has done some ground work.
