How's the change been from the CEO of a foreign bank to the head of a private sector bank?

The essentials of banking remain the same. You don't come into an institution with a belief that you know everything. The team has come with an open mind. The two-and-a-half months have been exciting. It's been a period of learning. We have been interacting with the staff to get a feel of what they think about the place.

What are the strengths and weaknesses? What do you think will make the bank tick?

The distribution channel is a very huge strength. Foreign bank have the limitation of reach, while here there is plenty. I feel like a child in a toy shop. In certain businesses, such as vehicle financing, the bank has a very strong domain expertise. The domain knowledge on marketing and post-disbursement management is also excellent. The bank finances over 30,000 new vehicles every month.

Technology is a big asset. We also have good expertise in small and medium enterprises (SME) financing.

The weaknesses pertain to the balance-sheet, profitability, lower returns, high costs and low investment. The management has to pay attention to revenues. The merger of Ashok Leyland Finance (ALF) with IndusInd Bank remained on paper, contributing to the problem. It is a legacy issue. Our action plan is to break the factors that caused failure.

What organisational and structural changes have you initiated?

We have redefined the organisational structure according to business objectives. You need to have a segmented approach based on the customer segment, both on the assets and liabilities fronts.

We have the corporate and commercial banking business, consumer banking, global markets, transaction banking and other support services. The bank has also decided to empower its frontline officers at branches to take decisions on the spot.

Regarding the compensation structure, there is a gradual need for the fixed pay to be marked-to-market. The variable pay will be based on the principle of 'make more take more'. The salary will have the fixed and variable components in the ratio of 75:25 in three years time.

Today, the compensation we provide vis-a-vis peers is miserably low. We would like to make the incentive and bonus system more robust and performance-oriented. We have a staff strength of about 3,000. We will add at least 1,200 people this year.

The merger of Ashok Leyland Finance with IndusInd Bank has always been on paper. Has the new team tried to integrate the two entities?

The statement of intent stresses on integration of the two entities. Vehicle finance is already a part of consumer banking by way of common management and infrastructure.

What will be your business strategy?

On the consumer banking front, we will continue to grow the vehicle finance portfolio though its share in the overall book may fall. There are good margins in financing two-wheelers, three-wheelers, truck financing, construction and extending working capital loans to small operators. We have stopped providing standalone personal loans due to the high delinquency levels and prevailing market conditions.

We have no plans to enter the credit card market as it is economically unviable for a small bank to make such investments. However, we may introduce a white label card for our chosen clients.

The bank is also working on increasing its low cost funds through liability and treasury products. Attracting low cost deposits is a tough nut to crack. There is hence a need to broaden the theme of low-cost funding.

On the corporate banking front, we will continue to focus on the mid-market and small and medium enterprises. We are also rejuvenating the non-resident Indian (NRI) business.