D Sampath heads private lender Federal Bank's retail banking operations. In an interview with Somasroy Chakraborty, he shares the recent trends in the Indian retail banking space. Edited excerpts:
Q. How is the retail credit demand in the current festive season?
A: The retail segment has shown resilience and is likely to gather steam in the coming days. We expect growth to be higher in the second half on a relative basis. The positive sentiment is expected to generate increased interest and demand in retail credit this festive season and thereafter.
Q. If banks decide to cut rates do you expect significant rise in demand?
A: Banks have reduced lending rates on home loans. As we advance in the third quarter, more banks are expected to reduce lending rates. The festive offers are more on the back of excess liquidity in the market. For the rates to come down from here, banks would wait from queues from the regulator. Any rate cut by the Reserve Bank of India (RBI) would definitely get passed on and propel retail business growth.
Q. How has been the credit quality of retail loans?
A: Contrary to popular belief and trend and thanks to the better credit processing and delivery system that has been put in place, the quality of retail loans has improved over the last one year. We have improved our recovery mechanism also.
Q. What is your strategy to attract low-cost deposits?
A: Differentiation by way of service is the main secret for attracting low-cost deposits. We give utmost importance to this. We have a basket of customised and segmented products and services under low-cost deposits. Our reach is our strength. We have opened our 1,000th branch recently at Muthur in Tiruvalla, Kerala where we offer convenience to our customers. The ambience, comforts and facilities that we offer is unmatched in the industry. We serve our customers offering door step banking facilities also.
Our channel offerings are also enticing. We give priority banking services all through our branches and we have opened priority lounges in our select branches and centres. We have made arrangements with Master Card whereby our Fed Select customers can make use of the Master card lounges at airports. Out special loyalty programme, Utsav rewards for using the debit cards at the POS, is an attraction. We provide the latest mobile banking facility, IMPS, to our customers.
Federal Bank won the top rank consecutively in two IMPS campaigns launched by the National Payments Corporation of India (NPCI). With better service, products and facilities we have been attracting and retaining our customers.
Q. How many branches you plan to open this financial year?
A: We plan to open between 150-200 branches this year, subject to regulatory approvals.
Q. What is your strategy to gain market share in the retail banking space?
A: Federal Bank has been aggressive in retail banking over the years. The bank has always been a forerunner in introducing new products and services.
The recently introduced Federal Easy Gold where the customer is given total comfort and convenience of converting and utilising the liquidity of gold anywhere anytime is unique in the industry. The limit sanctioned under this scheme can be withdrawn through any ATM and used at any point of sale (POS). The safety of gold is ensured at the hands of the bank. Through this product, we offer to our customers the safety of liquidity.
Another product, RD Extra Gain is a twin product, offering the benefits of a recurring deposit account and a loan facility. The product has features and benefits of a recurring deposit account. Beyond this, we offer a loan to the customer considering in advance the future remittances for next five years. For our existing home loan customers, we have come out with a product, Home Plus Property Power, through which we meet their financial requirements by giving top up loans up to their repayment capacity. We take over home loans from other banks. Giving total liquidity to the landed property, we give 15 years overdraft facility against the immovable property.
We have enhanced our reach and retail outlets by opening branches in large numbers across the country. At present we have 1,012 branches and 1,100 plus ATMs. We have plans to go stronger in the retail business and offerings.
