It is the inherent zest for changing with time that has endowed this Kerala-based bank an agility and ability to stay ahead. Federal Bank is now undergoing a strategic transformation that will see it leverage its strong brand to establish itself as a bank for the new-generation.
A strong NRI customer base that provides funds at lower cost, an appetite for absorbing technology, and transactional dialogues with customers have kept this bank going strong and ready to face any challenges in the future, said M Venugopalan, chairman and managing director.
From a modest beginning in 1931, the bank has achieved several milestones. It started with the business of chit funds and other banking transactions connected with agriculture and industry. Today, the bank has a net worth exceeding Rs 8,000 crore, a banking network of 565 branches and 474 ATMs. Flush with funds from a rights issue, the bank is also open to acquiring smaller banks that could give it a better reach. But options are limited in the inorganic route, feels Venugopalan. The bank had acquired five small banks in Kerala as early as 1964. Ganesh Bank of Kurundwad was acquired in 2006, giving Federal Bank 28 more branches in Karnataka. Reaching out to more towns in South India is the immediate priority and that could position the bank as one with a marked presence in south and west India.
The bank will continue its focus on the retail and SME sector. It hopes to be a strong player in the retail and SME sector in the south and west of the country, where it has good presence and tremendous goodwill among customers. It has an alliance with Small industries Development of India (Sidbi) to increase its credit flow to the SME sector. The agriculture sector has been a forte of the bank since its inception and products suited for farmers are tailor-made by the bank. The management takes a keen interest in taking the services of Federal Bank to all in the rural areas with programmes like total banking. It has adopted several villages that now have accounts for all the households.
Perhaps, Federal Bank is the only bank that has successfully empowered farmers with innovative products that help utilise the futures market to hedge risks. FMC vouches for the model followed by the bank in providing credit to farmers who deposit their rubber stocks in accredited warehouses. The role of the bank in developing farmers? cooperatives as aggregators to make tradable lots in non-cash crops is being emulated as a role model across the nation, Venugopalan added.
The bank is one of the first banks in the country to inter-connect all its branches and to deploy most of the technology-enabled services at all branches, including those in the rural and semi-urban areas. Venugopalan said that the bank has completely shifted to core banking solutions in association with Infosys. The bank, in association with IDBI and Fortis International, has incorporated a joint venture life insurance company. ?It will enable us to design products suited for our customers conferring an advantage over other banks,? the chairman said. The bank has also reactivated its wholly-owned subsidiary company, Fedbank Financial Services Ltd, with the objective of marketing retail asset products and third party products. Venugopalan says, ?We are growing at a rapid pace that exceeds 35% annually. With some good luck we could stretch it to 45%.? The bank has set its target to achieve a total business of Rs 10,000 crore by 2011 and Rs 150,000 crore by 2013.
For the current FY, the bank hopes to take its total business (advance plus deposits) to over Rs 47,000 crore by March 2008. At the end of 2006-07, the total business of the bank stood at Rs 36,483.54 crore. At the end of March 2007, the bank had a total deposit of Rs 21,584.44 crore and total advances of Rs 14,899.10 crore. The bank?s lending to the priority sector as on March 31, 2007 accounted for 43.90% of the net bank credit.