Tuticorin-based lender Tamilnad Mercantile Bank (TMB) is following up on the rebranding initiatives it had embarked on some two years ago. The bank, conventionally known as a small traders? bank, continues to focus on retail lending while targeting new-generation customers. It is awaiting court clearances to hit the IPO market. KB Nagendra Murthy, managing director & chief executive officer of the bank, tells Sajan C Kumar that TMB wants to grow profitably. Excerpts:
What has been the impact of the new rebranding initiative?
We are continuing to upgrade our technology platform and trying to implement paperless transactions as far as possible. By March 2014, we want to have 1,000 business centres ? branches and ATMs. Today, we have 962 business centres, which include 362 branches and 600-plus ATMs. We are focusing on the retail segment and are reasonably doing well. We have already hit our target for agricultural advances, which is 21% of the total portfolio.
What are the plans for next year?
We will pay attention to enhancing Casa and implementing higher versions of technology. Currently, Casa is at 17% and, if we reach 20%, we will be happy. Casa mobilisation will be our mantra and we have asked our teams at the branches to market the product aggressively.
On the technology front, we will be implementing higher versions of core banking solutions, so that customer-friendly initiatives can be undertaken. We have already implemented mobile and Net banking and, going forward, we will be aggressively marketing these products. We have been going slow on the deposit front; the growth is just around16% this year.
What are the plans on business and network expansion?
We would be happy to do a business of R40, 000 crore by March end with advances at around R18, 000 crore and deposits at around R22,000 crore. The growth in FY14 would be close to 20%, but it?s hard to say how the coming year will be. Close to 30% of our new branches will be opened in states other than Tamil Nadu, such as Andhra Pradesh and Maharashtra.
Also, we will be opening a regional office in Kerala where there are currently seven branches. We will be integrating branches from Kanyakumari and Nagercoil areas to form a Thiruvananthapuram region and this should help us in getting NRI deposits. Last year, we opened one NRI cell in Chennai and it helped the bank double NRI deposits. We have been networking with the NRI population in Dubai. We will be recruiting around 200-250 people next fiscal; this year we hired 400 people.
FY14 has been a difficult year for banks…
Yes, whenever there is a downturn in the economy, banks are in trouble since companies, the trading community, get impacted. The depreciation in the currency, too, has hurt companies as have higher commodity prices. We, too, had some exposure to infrastructure companies, which have been through a rough patch. As a bank, we consciously curtailed our advances and, consequently, interest income did not grow as expected.
The bank?s asset quality has been under stress…
Yes, the slowdown in the economy has also impacted us though it?s not too worrying. The bank reported a gross NPA of 2.57% in the December 2013 quarter against 1.48% in the same quarter last fiscal. Likewise, our net NPA stood at 1.42% against 0.54%. Banks have been hit by delays in infrastructure projects where land acquisition has been a problem. Our bank is the common man’s bank and we want to continue with that model. That is precisely why we are looking at tier-2 to tier-6 geographies for further growth. If you go to unbanked areas, you will get the benefits of a first mover.
What is your take on banks taking up the broker model for insurance products?
We have a corporate agency model for selling insurance products and it looks better for us. We have tie-ups with LIC for life insurance and United India for non-life insurance products. We want to continue with this model unless we are forced to take up the insurance broker model. As far as our IPO issue is concerned, we have to get the court’s clearance and conduct four pending AGMs.