Dirham slide not to shatter Federal Bank's Gulf dream

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Thiruvananthapuram, Mar 25: Despite dirham weakening against the dollar, Federal Bank is firm on its target to deepen its footprint on Gulf sands next year. The Kerala-based bank, listed on the London Stock Exchange (LSE), had recently opened representative offices in Abu Dhabi and London.

As soon as the private banks are allowed to open branches outside the country in 2009, Federal Bank is resolved to open full-fledged branches in Gulf and then in the US, according to a top bank official.

Even the Damocles’ sword of a currency depreciation in Gulf, that’s scaring potential NRI depositors, has not stopped Federal Bank from dropping the proverbial bankers’ caution.

The processes to get permission for a representative office in Gulf are so rigid, that it makes best sense to seize the hard-won licence and toughweather the currency flutters, R Sivakumar, DGM, Federal Bank said.

Since NRI deposits have fallen below the last year’s base, the gameplan is get representative offices abroad to channelise NRI money to the Indian branches. “Early results are encouraging,” Sivakumar told FE. “Through the UAE office, started only in January 2008, about 3800 to 5000 demand drafts per day are made to our home branches,” he said. They also sell the bank’s insurance products, third party MF products and bullion deals.

“Non-interest revenues have gone up by over 100% in last year,” Cheriyan Mattom, AGM, said. “While this was only 1.7% of total revenue in last fiscal, in the current year, this is about 3.4-3.5%” he said.