Sunday, March 17, 2013

Punjab & Sind Bank in conversation

Executive Director,Punjab & Sind Bank in conversation with B&E’s Avneesh Singh

B&E: Your average net interest margin (NIM) at present is at a low of 2.50%. Is it because you have problems in raising low cost deposits?
PKA: There were a couple of reasons for which our NIM went low some time ago. Traditionally, our NIM was over 3%. But we had to make a few sacrifices to achieve the kind of growth we have exhibited in the last few years. We had to resort to a little low NIM to fund our growth and credit needs. However, we have now reached that critical mass where we can moderate our growth. So, we are now planning to strike a balance between growth and better ratios. Nevertheless, our NIM has already improved from 2.45% to 2.79%; but we are not satisfied with this figure as we want it to be above 3%. We have plans to resort to CASA deposits, which will help us to improve our NIM. In fact, the branches we are opening in the rural areas will also help us a lot in this direction as every branch that we are opening in these areas is getting us CASA of Rs.50 to Rs.100 million. In addition to this, we will also be running a CASA scheme to increase our deposits. Last year, we ran a scheme and managed to mop up deposits worth Rs.15 billion in just 3 months time. We are planning to run similar schemes this time also... and very soon.

B&E: Are you looking at other areas like fee-based income to boost your income in the near future?
PKA: We get additional income from things like letter of credits, bill guarantees, upfront fees, processing fees et al, which are part of normal banking activities. Besides, we are into selling third party products, like life insurance products for Aviva Life Insurance, and non-life products for Bajaj Allianz. Of late, we have started taking this quite seriously. Thus, we are recruiting more people and getting them trained to boost revenue from these sources. Apart from these, we also sell products like gold coins on different occasions. Like on Dhanteras, we launched our gold coin scheme and sold roughly 70 to 80 kgs of gold in one day. In terms of additional revenue sources, recently, we are also eying micro insurance sector and are getting into loan syndication in a small way. But then, at present, it’s the fee income and bank assurance where we are betting big on.

B&E: Considering the entry of more number of foreign banks and new licensing, Indian banking sector is set for some serious competition in the days to come. Being a small bank, do you think that your existence may come under threat then?
PKA: I think we will remain light on our feet because of the small size; ourturn around time and decision making will remain very fast. For example: I have 400 branches and 12 zonal offices in Punjab. So, all the proposals that come to these 400 branch heads can be quickly sent forward to the zonal heads and decisions can be taken super fast. As a result, it will not be necessary for the customer to go to third or fourth level managers, and his problems can be sorted out quickly making him happy and loyal.

 Read more.....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles


Posted by at
Labels: , , , , , , , , , , , , ,