BoI to attract high net-worth individuals to counter deposit woes: CEO & MD

Open to joint venture or inorganic acquisition of mutual fund unit

Bank of India (BoI) will focus on 1,000 branches out of its 5,200-branch network to attract high net-worth individuals (HNIs) to garner durable money, amid growing pressure on its retail deposits. This is part of a plan to enhance the granularity of deposits and set up a wealth management business by March 2026.

 

The Mumbai-based public sector lender will also open 200 new branches in semi-urban areas during this financial year as part of a five-point plan to intensify resources mobilisation.

 

Rajneesh Karnatak, managing director and chief executive officer, BoI told Business Standard said the bank will focus on customers with balances of Rs 10 lakh in these branches for hawking deposits, as well as loan products and investment products.

 

The bank’s customer base is 110 million but the product per customer sale is 1.4. There is scope for more engagement and the bank intends to enhance the level to 2 per customer in the next 12 months, he added.

 

While its total deposits increased 10.15 per cent year on year (Y-o-Y) to Rs 7.75 trillion till September end, the bank has guided for a 13 per cent growth in deposits for FY25. The share of low-cost deposits - current account and saving account (Casa) – in domestic business declined to 41.18 per cent in September 2024 from 43.13 per cent a year ago. However, the share of retail term deposits moved up to 45.04 per cent in September from 44.39 per cent.

 

Eyes value addition via wealth management services

 

A grooming branch network for servicing HNIs is a stepping stone for a full-fledged wealth management business. This would be supported through wholly-owned subsidiary BOI Shareholding Ltd providing services to clients of depositories and web-based technology support for financial services.

 

The bank is hiring professionals from the private sector banks on market-linked compensation. Currently, the team size is 250 and it intends to hire 3,000 more in the next 12 months, Karnatak said.

 

Senior public sector bank executives said while a sizable business opportunity exists, developing the ecosystem, and managing the quality of services and customer expectations are key challenges in building a wealth management business.

 

State Bank of India has an active wealth management business with a client tally of 0.43 million and assets under management of Rs 3.39 trillion at the end of March 2024.

 

Raising asset management ambition

 

Keeping in view the growth in the business of subsidiaries and extension of wealth management, BOI is also scaling up the activity of mutual fund (MF) unit BOI Investment Managers Private Limited.

 

Karnatak said while the MF unit has seen substantial growth in the assets under management (AUM), the bank is open to having joint venture partnerships or making inorganic acquisitions to grow further.

 

The AUM for Bank of India Mutual Fund (BOI MF) schemes rose significantly from Rs 3,780 crore in March 2023 to Rs 7,008 crore as of March 31, 2024. The AUM rose further to Rs 11,340 crore at the end of October 2024. Its investor folios across all schemes increased from 0.32 million in March 2023 to 0.44 million in March 2024 and further to 0.64 million at the end of October 2024.

 

Public sector bank-promoted MFs include SBI Funds, BoB Mutual Fund and Canara Robeco, Union Bank MF.