At a time when banks are finding it difficult to rely solely on core banking business, as the interest rates are high, they are vying with one another to adopt innovative ways to woo customers.
While Bank of India is concentrating more on non-interest income by selling third-party products and is nning to make its foray in the mutual fund and insurance business, banks like Bank of Baroda and Union Bank of India are paying more attention to SMEs and agriculture businesses.
Interestingly, the bankers feel that the ongoing debt waiver scheme will help them write off their NPAs in the agriculture segment and thus open new avenues to go for fresh farm loans.
Bank of India has planned to make its foray into the mutual fund business later this year. Once its mutual fund business takes off, it will have to stop selling the mutual fund products of five companies, including UTI MF, Kotak Mahindra, Franklin Templeton, and HDFC as per the norms.
Besides, the bank is also likely to venture into the life insurance business in a joint venture with Dai Ichi (26%) of Japan and Union Bank of India (23%) later this year. Once it happens, the bank will stop selling products of ICICI Prudential as third party distributor.
Another public sector lender, Bank of Baroda, also has aggressive plans to tap the tremendous potential that the SME sector has been blessed with.
MD Mallya, the bank chairman and managing director, said that with a view to expedite the loan process to SMEs, the bank has created 27 loan factories and 15 retail loan factories. The time frame for clearing loans for SMEs has been fixed at 14 days, said Mallya, who had recently held the three-day meeting of all zonal heads of the bank.
Yet another state-run bank, Union Bank of India, which aspires to join the league of the top three public sector banks by 2012, is under the process of changing all its normal banking branches to sales offices.
The idea was to free the staff at the branches doing mundane jobs like debit and credits and transform them to sales officers. They may be deployed to sell the products of the bank either over the counter (OTC) or marketing them outside the branches. Branch layout is also being changed for all the personal branches of the bank. These offices will be monitored by the centralised processing centres (CPCs), which would act as specialised skilled processing offices to clear loan proposals and sanction them in a speedy manner. Nine such CPCs have already become operational at places like Mumbai, Delhi, Hyderabad, Bangalore, Chennai, Bhopal, and Lucknow. These CPCs will be monitoring 111 SME branches. Apart from it, a business vertical has been created at the corporate office level.
The idea was to focus on the growth of SMEs. Moreover, the bank has created a structure for third party distribution of products like insurance, mutual funds, online trading, and running of demat accounts.
This will help the bank in increasing its fee-based income to grow to 50% at Rs 1,500-1,600 crore from the current mark of Rs 1,080 crore.