IOB to go for business process re-engineering soon

The Chennai-based Indian Overseas Bank (IOB) intends to go for Business Process Re-engineering (BPR) of its operations as a performance boosting measure.

Initially, the bank would launch a pilot project in this regard before scaling it up later. This initiative of the bank comes after it became hundred percent Core Banking Solution (CBS) compliant.

“Since we have achieved 100 percent CBS, we intend to go for BPR. We are in the initial stages and working out an appropriate model. It will be launched on a pilot basis and then will replicated after the process stabilises”, S A Bhat, chairman and managing director (CMD), IOB, told Business Standard. Bhat was here in connection with the inauguration of a food processing plant.

“We can’t replicate other banks model, so we have to work out a model suitable for our bank”, he said. However, he declined to give any time frame saying that it will take some time to start the BPR initiatives.

He said, the bank will focus on infrastructure finance, agricultural loan and loans to small and medium enterprises (SMEs). Between April 2008 and June 2009, the bank has restructured loans amounting to Rs 8200 crore availed by large, medium and small industries. IOB along with Andhra Bank and Bank of Boroda (BoB) is planning to set up a joint sector bank at Malaysia. The approval of the Reserve Bank of India (RBI) has been obtained and the formal approval of Malaysian authorities is awaited. The joint sector bank is expected to be commissioned before the end of the current fiscal. Similarly, the bank has obtained permission to open a representative office at Dubai and the land is being identified for setting up of this office.

As part of its plan to be a core investor venture capital fund (VCF), similar to private equity (PE) fund, the bank has finalised a joint venture partner to foray into venture capital business. However, Bhat declined to name the partner.

The bank had a capital adequacy ratio (CAR) of 13.24 percent by June 2009 and expects it to be about 14 percent after raising about Rs 1000 crore by way of upper Tier-II and Tier-II bonds couple of weeks ago.

On recruitment, Bhat said, to bridge the gap in manpower, 1250 probationary officers and 1000 clerks were appointed by the bank recently. While there is no plan to add more people this fiscal, the bank will have a relook at recruitment only after March 2010.

IOB targeted to open 78 branches across the country during 2009-10 and has so far opened 18 branches. It also plans to add 50,000 additional micro-finance institutions (MFIs) accounts during the current fiscal taking the total to 3 lakh by the end of the current fiscal.