Rural Strength

Andhra Bank is among the top ten in three out of the five criteria used for deciding the ranks. It is at the top of the ladder in terms of profitability, seventh in productivity, ninth in growth, 25th in safety and 42nd in efficiency.

Excerpts from an interview with the bank’s chairman & managing director Krishnamurthy Ramakrishnan.

Andhra Bank is still a small regional player. What is your growth plan?

We have been growing our balance sheet, but the volume growth is not adding much to the bottomline as corporates are unwilling to pay high rates. We need to discover new revenue streams. There are three focus areas before us: retail lending, fee-based income and recovery of bad loans.

Retail loans now account for over 20 per cent of our total loan book – Rs 3,867 crore out of total advances of Rs 19,150 crore. We plan to push it up, as the interest margin is higher at retail business. We are increasing our fee-based business by selling third-party insurance and mutual fund products through our financial services centres. Our gross NPAs are about Rs 435 crore, and we are trying to recover as much as we can.

Is retail the new business mantra?

In a way, yes. We are working on a new face for the bank. We have employed about 400 client relationship officers and marketing officers. Most of them are not attached to any branch; they work independently. They are the new face of the bank.

We have 13.5 million customers, which include 12 million depositors. The challenge is to offer these customers a new banking experience. We are in the process of introducing 9-to-9 and Sunday banking.

But why is it still, predominantly, a south-based bank?

Yes, 800 of our branches are located in Andhra Pradesh. But we also have significant presence in Orissa, Maharashtra and a few other states. We are opening a representative office in the UAE – our first overseas foray. The objective is to tap the remittance business as there is a huge Telegu-speaking population in the UAE.

Our strength is our rural bias. We run nine rural development institutes where about 48,000 people have been trained. We finance their ventures. This is proof that development banking is alive and kicking.

Any plan for inorganic growth?

We are continuously on the lookout for acquisitions. If we get the right fit, we will go for it. But we will not acquire a bank just for the heck of it.

Plans for follow-on public offer?

Yes, we plan to hit the capital market in January next year, provided all regulatory approvals are in place. Following the issue, the government’s stake in Andhra Bank will come down from 63.5 per cent to about 51 per cent. We will have enough elbow room to raise tier-II capital for assets growth.

What is the biggest challenge before you?

Our biggest challenge is to maintain the profitability. With treasury income drying up, it is going to be tough times ahead. We are not only focusing on new income streams, but also cutting down overhead cost. After all, we are answerable to our investors.•

Back to previous page