Karur Vysya Bank embarks on a multichannel strategy to drive growth
Karur Vysya Bank (KVB) He said the bank is on the path of shifting from branch-led to multi-channel led operations as the legacy private sector bank seeks to maintain the growth momentum in total business and profitability.
The bank, which posted a record profit of Rs.1,106 crore and strong numbers across several parameters for FY23, is anticipating margin pressures in the next three to three quarters as cost of deposits may rise by 40-50 basis points. However, she hopes to maintain her performance. Also, he is not required to raise any capital, although he may review the decision after a year.
P. Ramesh Babu, Managing Director & CEO, KVB discussed the bank’s transformation journey after opening its 800th branch and first digital banking unit in Chennai. KVB plans 35 new branches during this fiscal year.
He said that multiple channels and new units have been created to support the deposit base and increase advances.
Babu said that more than 77 per cent of his deposits are less than Rs 1 crore, indicating a delicate deposit structure. The 20 largest depositors make up less than 5 percent of its total deposits, and he added, “Our dependence on the largest deposits is not there, and this is the strength of the bank.”
multiple channels
All these years, these deposits were mostly mobilized by the branches. With the increasing need to serve existing customers and bring in more, KVB has created multiple new channels. I have created a CSR retail sales team, who will have “feet in the street” (FOS). We have taken people from different banks. Babu said: We have already employed 500 people in the past three months and will gradually increase the number.
KVB plans to hire 1,300 FOS over the next 12-18 months. They are given the task of meeting people and getting new accounts, mostly checking and savings accounts, corporate payroll accounts, government companies, third party products, etc.
Also read: Settlement Settlement is not available to Borrowers as Right: RBI
The goal is to increase CASA’s stake to 40 percent, over 3 years, from 33 percent now. He added, “Increasing CASA’s stake will lower the cost of deposits, and we will be able to offer better rates to our borrowers.”
On the progress front, KVB has already taken steps to make book management more precise in the event of sudden pressure. As a result of its initiatives, it has reduced its corporate loan book to 21 percent now from about 40 percent earlier. I have further divided this portfolio into corporate and commercial, whereby corporate loans above Rs 25 crore will fall under the commercial category, mostly focused on the small, medium, small and medium business and trade sectors. Right now, the trading portfolio is 32-33 percent of the book.
Since the bank is keen on targeting MSMEs and trading units, it has set up a KVB Smart unit, under which there are relationship managers to deal continuously with potential clients who may request loans in the range of Rs 5-10 crore. It has also established business banking units and is planning a Business Correspondent (BC) model before opening branches.
Plans to hire 5000 BC by December this year. These are like little branches. Once transaction levels grow, we may open a branch there. “Overall, we feel that the dedicated channel will lead to better business loan growth,” Babu said.