Karur Vysya Bank expects total business to cross ₹3 trn in 4 years: MD

KVB MD B Ramesh Babu talks about the future road map, product strategy, and business growth

Karur Vysya Bank’s board last month approved the re-appointment of B Ramesh Babu as the managing director and chief executive officer for a third term till July 2028. In an video interview, Babu talks to Shine Jacob about the future road map, product strategy, and business growth. Edited Excerpts:

 

What will be your priorities during the next two years?

 

We will be looking at where the money is coming from and where it is going to bring value. We will look to run the bank in autopilot mode and how to scale it up to the next level.

 

In 2020, our non-performing asset was around 9 per cent. This is now under control. Now that repair work has been completed, we have to improve the risk appetite of the bank. I need to look at how the risk-weighted assets appetite can go up further, and what products we can introduce.

 

One example is MFI (microfinance institution). I was a bit skeptical. When the bank has not even one rupee of MFI, a few banks have over ₹10,000 crore of the portfolio in Tamil Nadu. Being in Tamil Nadu, we have not done that. We will test the waters. We have three partners and brought out a book of ₹300 crore, and now it’s around ₹200 crore. Another good opportunity is credit cards. Also, we are not in affordable housing.

 

What is your strategy with regards to the corporate portfolio, as it came down from 40 per cent in 2020 to around 14 per cent in Q3?

 

In the next two years, we see a huge opportunity in the corporate business also, because we were focusing majorly on fund-based business. Now, there’s a lot of opportunity in the non-fund-based business. We expect it to settle at around 15-18 per cent in the next two years.

 

Your total business is at ₹2.1 trillion now. Where can this be by July 2028, when you step down?

 

I will not be able to give any guidance on that, but I’ll just give you a few pointers. Our growth guidance is around 15-16 per cent this year. It took 104 years for the bank to get the first ₹1 trillion in 2021. Within four years, we are able to cross ₹2 trillion in total business. If we intensify our efforts and the various channels that we are adding, we may be able to add the next ₹1 trillion in less than four years.

 

Your gold loan business is doing really well. How are you insulating yourselves from a possible lower-price regime in future?

 

Though RBI (Reserve Bank of India) has allowed the LTV (loan-to-value ratio) of up to 85 per cent, our current LTV on the portfolio is 55 per cent. So, we have maintained a margin of 45 per cent. We cannot expect the gold price will come down by 50 per cent; even if it comes down by 20 per cent, we are relatively insulated.

 

We are also mindful that no particular product should dominate the bank’s portfolio. That is the reason why corporate, which was dominating, came down.