Unlike its peers, Allahabad Bank’s loan flow has grown at 24 per cent during the year-ended December. JP Dua, who recently took over as chairman and managing director, tells Manojit Saha and Sidhartha that the Kolkata-headquartered bank plans to leverage its branch network to grow. Excerpts:
Having been an executive director of the bank, you are seen as an insider. Does that help?
It is continuity for me as well as the bank. It is an advantage since I know the bank and people at the bank know me. I have been a part of the team for one-and-a-half years. I will be able to carry forward the plans that we formulated and the strategy that we adopted in recent years.
What will be your strategy?
This is a fairly large bank with 2,300 branches and we are opening another 68 branches. One thing that we have been unable to do is to effectively leverage our strength of the branch network. With this network and technology, the first priority will be to add volumes. I will see to it that they are all on core banking solution (CBS) by December. Already 80 per cent of our business is on CBS. We have reached Rs 160,000-crore business and hope to be at Rs 175,000 crore by March. We will reach Rs 200,000-crore business by December-end.
The second priority will be capacity building. Skill levels need to be developed to enable people to take on bigger responsibilities in a bank that has been growing. We will send people to training institutes such as MDI, and we are talking to Indian Institute of Management at Lucknow and Kolkata.
Retail growth will be the third focus area. We had launched a scheme in October which brought us a fresh business of Rs 1,000 crore in three months. We are in the process of opening 26 retail boutiques to provide more thrust to the retail business. These will be one-stop shops offering home, car and personal loans and these proposals will be processed centrally. At present, the share of retail loans is around 18 per cent. By March 2011, this will rise to 20-22 per cent, which is the average for all public sector banks.
Low-cost deposits will be another focus area. We had set a target of one million new savings bank accounts in four months and we have achieved the target. Now, we are focusing on current accounts. We have shed high-cost deposits and want to ensure that the share of Casa is around 35 per cent.
You are seen as a bank that is focused on the eastern part of the country. Are you going to do something about it?
It is a pan-India bank. We have 62 branches in Punjab, 40 in Haryana and 52 branches in Delhi, over 700 branches in Uttar Pradesh and 467 branches in West Bengal. We currently have 120 branches in southern India and will add 12 more by March. We now have 40 branches in Gujarat and will open more branches in Maharashtra.
Allahabad Bank has grown faster than the industry. What has contributed to this growth and what is your expectation going forward?
You can say a part of it is due to the base effect. This year, we had set ourselves a target of 18 per cent credit growth, but could achieve 24 per cent till December. Let’s see how the next quarter pans out. Sectors such as steel, cement, engineering goods and retail have contributed to the increase. We have not fixed the targets for next year, but the prospect of higher gross domestic product growth is a good news for us.
Consolidation is a hot topic of discussion and you are seen as a potential target…
The government says that it will only act as a facilitator and the initiative has to come from banks. We are ourselves a large bank. We will go for organic growth.
The bank focuses on mid segment companies. Is it not a more vulnerable segment and don’t you want to be in the large-companies’ segment?
I am not out of that segment. Mid-segment is the opportunity today. I sell more than one product in this segment and earn better margins. Besides, I am not compromising on asset quality even here. Our gross NPA was 1.78 per cent and net NPA 0.30 per cent of the assets.