Karur Vysya in rejig mode

Karur Vysya Bank (KVB) has started implementing the recommendations of management consultancy Boston Consulting Group (BCG), including organisational restructuring and business re-engineering, in a bid to meet the private sector lender’s Rs 1.25 lakh crore business target by 2016. “Even amid the slowdown in economic growth and increasing competition in the market, the bank has managed to focus on execution of its strategic agenda and delivered results which would ensure that the bank is on the right track to achieve its centenary year (2016) goals,” said K Venkataraman, managing director and chief executive officer.

“We have started implementing the recommendations of BCG under Golden Vision Initiatives and are periodically reviewing the progress of the project implementation,” he said in a communication to the shareholders. The bank appointed BCG in 2009 to prepare its long-term business plans. In all major business parameters, KVB’s growth in 2011-12 was higher than its compound annual growth rate for the past five years.

During the year, the lender implemented the BCG recommendations like organisational restructuring at the central office and at divisional offices, ramping up key business development and support initiatives across the banking network and targeting the crucial areas for transmission.

The organisational structure has undergone major changes with verticalisation of business strategy group, operations group, risk, inspection and audit and human resources departments.

The business strategy group is further organised into business segments such as personal banking, commercial banking, corporate and institutional banking, international banking and treasury and funds management.

“While we are generally optimistic of the economy picking up momentum and growing in the future, we have formulated our near-term strategies based on the prevailing economic scenario,” said Venkataraman.

For 2012-13, the bank has set a gross business target of Rs 72,000 crore. The bank has crossed its projected level of Rs 55,000 crore in 2011-12 and reached the business level of Rs 56,317 crore, after the initiatives being undertaken.

Total deposits increased to Rs 32,112 crore from 24,722 crore, an increase of 29.89 per cent. Current account, savings account (CASA) deposits accounted for 19.16 per cent in aggregate deposits. The average deposits stood at Rs 27,156 crore in 2011-12, compared with Rs 20,973 crore in 2010-11, an increase of 29.48 per cent.

KVB will give a major thrust to improve the CASA ratio, recovery of non-performing assets (NPAs), improving fee-based income by effectively focussing on parabanking, leveraging technology and offering new innovative products to target young and tech savvy clientele, he said.

CASA deposits of the bank were at Rs 6,152 crore as on March 31, 2012 against Rs 5,755 crore as on March 31, 2011. The gross NPA of the bank as on March 31 was at Rs 321 crore (1.33 per cent) against Rs 228 crore (1.45 per cent) a year ago.

This is mainly on account of large amounts of slippages to NPAs despite the best efforts. The net NPAs of the the bank stood at Rs 79 crore (0.33 per cent) at the end of the 2011-12, up by 0.26 per cent over the year-ago figure of 0.07 per cent.