Bank of baroda, a third of whose loan book comes from international operations, is looking to expand its global footprint. BoB executive director Ranjan Dhawan tells Pranav Nambiar and Pallavi Ail that the bank wants to build a truly global franchise by tapping retail customers beyond the Indian diaspora. Excerpts:
The banking industry is working hard to upgrade technology to offer customers digital products. What are BoB’s plans?
Our digital banking strategies are more or less the best in the field. There may be one or two features some bank is offering that we are not, but those are essentially fringe benefits. When it comes to basic banking, we are as good as anyone else. The challenge in digital banking is finding the most convenient way of transacting and in future, probably everything will be mobile phone-based, we may not even have cards. Going forward, small payments-enabled services are going to assume importance.
Does Bank of Baroda plan to enter the payments bank space?
To my mind, what really matters where small money transfers are concerned is the last-mile reach. In many respects, the last-mile reach is better served by kirana shops. We will be moving slowly on this front because the number and value of transactions are very small and they could be a drain on resources of the bank if we move very rapidly.
Bank of Baroda has significant overseas operations. Any plans of expansion?
One-third of our bank’s balance sheet is abroad and I doubt any other PSU bank has this large a presence internationally, but we are thinking of radically changing our overseas strategy.
We are now planning to acquire a truly global franchise. Our presence in the countries we are in is tiny and we plan to enhance this with a wider retail focus beyond the Indian diaspora. While reorienting our business and products, we will also recruit locally. This thinking is only a few months old and we will start implementing this from April. Wherever an existing borrower in India has a good credit history and wants to do business abroad, we are his natural bankers. Essentially, the Indian is going global and we are going global with him. If we cannot service the Indian abroad, we will, over a period of time, not service him in India.
You said recently that demand for credit remains low. Has that changed?
There is no demand for credit and I believe that we should worry about why the rates are so high and create a conducive environment for the rates to fall. The Reserve Bank of India has certainly done all it could but the main reason for the absence of demand is not the price. The sentiment is positive and companies do want to invest, there is some translation on the ground. But the pick-up is nowhere near what we had hoped for. Projects are on hold because investments depend on a good environment. Right now industrialists are waiting and watching how the the plug-and-play power projects proposal will work. We would also not finance a power project today if it doesn’t get a coal linkage. I think if land is available, environmental clearances are on the table — all factors due to which economic performance of the country has seen setback — credit demand will pick up over the next seven to eight months.