Indian Overseas Bank (IOB) is on a mission to retrieve its lost position in terms of business and has roped in consulting major KPMG to help it energise its human resources. M Narendra, who took charge as chairman and managing director of the Chennai-based lender in November, tells Manojit Saha the bank has rolled out a medium-term plan to increase its business and is venturing into several new businesses. Edited excerpts:
Which areas will be your immediate priority?
The immediate priority is to re-energise the bank in the area of human resources. We have initiated an internal programme, namely IOB Pride, to re-activate and bring back our energy and the power of enterprise. The programme will cover three areas — human resource development, process improvement and technological development. KPMG is advising us on this.
It has given a preliminary report on internalising the growth process and a few groups have been formed to execute the plan. The management is talking to colleagues and re-activating their IOBian pride.
In terms of business, which areas are you looking at?
We have initiated another programme —showcasing IOB as southern pride. Earlier, we were seventh among public sector banks. However, in the last two years, may be due to slightly lower growth, we came down to the tenth position. Our immediate endeavour is to go back to the seventh position. This year itself, we have expedited the growth process.
At present, our total business stands at Rs 2.11 lakh crore. We want to take it to Rs 2.50 lakh crore by the end of the current financial year.
With all these initiatives, where do you see the bank in two-three years?
The medium-term plan, which will be achieved within three years, is to increase our branches to 3,000 from the current 2,015. The number of automated teller machines will be increased to 3,000 from 900. In addition, we envisage a business figure of Rs 5 lakh crore in three years.
Any plan to increase foreign presence?
At present, we have six branches abroad and three representative offices. We are also opening a joint venture in Malaysia, along with Bank of Baroda and Andhra Bank. Also, we are looking at greater expansion in areas like Malaysia, New Zealand, Australia and Africa, where we have good southern presence.
Will you be open to joint ventures (JVs) for expanding foot print in overseas territories?
That is the feeling I have. I think it would be ideal to form a JV with other banks for operating in foreign countries.
Deposits are growing at a slow pace, which has the regulator worried. Are you planning to beef up deposit mobilisation?
I believe in giving good returns to depositors. Recently, we enhanced the rate to eight per cent for 555 days and 8.25 per cent for 1,000 days. There are a number of pockets which need to be tapped by offering products and services like demat accounts and life insurance products. Delivery channels like internet banking are also important for attracting depositors.
Public sector banks will never be short of deposits. The only thing is that we need a lot of ground-level activity to market these products. We have to meet as many customers through our outreach programme as possible.
With the cost of deposits rising for the bank, how will the margins be affected?
We have a good net interest margin of 3.02 per cent. Due to increasing deposit costs, it is difficult to say whether we can improve it. However, we may be able to maintain these margins.
Do you see the lending or the base rate going up any time soon?
Banks may review the lending rate only after January 1, not immediately.
Do you think cutting the cash reserve ratio is an option before RBI to tackle the present liquidity crunch?
RBI has a lot of options. It has assured us liquidity support, which it has demonstrated. Unless inflation comes down, it may not cut CRR. Otherwise, it may go in for a further reduction in the statutory liquidity ratio or extension of the facilities.
There is some pressure on asset quality. How will you address that?
Our bank has a very good asset cover. At Rs 3,600 crore as on March 31, the non-performing asset figure is a bit high due to the crisis we just had. However, it is showing signs of coming down. It came down to Rs 3,326 crore by the end of September. As of now, we have recovered Rs 864 crore in this financial year. With further recoveries, the figure may come down to Rs 3,000 crore. The gross NPA ratio, which stood at 3.78 per cent, will come down to three per cent, partly due to good credit growth.
Any plan to venture other business areas like asset management?
Venturing into areas like asset management, capital market and wealth management is under the medium-term plan, subject to board approvals. As southern pride, we have to ensure we are not falling short in any area.
