MV Nair, CMD
he brand equity that many of India’s 28 nationalised banks wield in the public mind would make anyone yawn. They are the giants, but they are also the business-as-usual types. But one among this pack has recently captured the public imagination, hinging on a heart-touching campaign – ‘Your Dreams Are Not Your Alone’. Featuring dreamsharing pairs like parent-child, husband-wife, elder-sibling-younger-sibling etc, the message was subtle, yet clear – your dreams are also Union Bank’s. A tall claim? Are there any real credentials for it? What is so unique about Union? 2008-09 was not an easy year for Indian banking. Plagued by market uncertainties, loan book growth was not at all impressive, if at all there was any growth. But contrary to this general industry trend, Union Bank’s loan book growth accelerated steadily
through the first three quarters thereby enabling this PSU giant to close the fiscal with a better-thanpeers loan book, despite the fourth quarter dipping. The bank had made net profits of 45% during the first three quarters. An expanding loan book means a more customer-centric bank. This performance was also reflected in the bourses, with Union Bank outperforming Bankex by a whopping 25%, even in the choppy markets since September 2008. The stock still enjoys a BUY recommendation from key analysts. Customer friendliness was always a principal aim at Union. Otherwise, how could it be the first and only nationalised bank to offer their customers free access to their accounts from any banks’ ATMs? Starting from this financial year, RBI has forced other banks to adopt this best practice. Union Bank has responded to this move by announcing plans
for 500 more ATMs to its network. Always working in tandem with their customers, Union Bank is not oblivious to the difficulties faced by the SME and home-loan customers. The Mumbai headquartered bank is in the process of restructuring 1 lakh loan accounts to address the difficulties faced by customers in home EMIs and industrial loans. Thereby lending credence to their corporate motto – ‘Good People to Bank With’. Under the leadership of industry veteran and its Chairman MV Nair, the bank is also making strategic moves to capitalize on the new business environment. As per the directions of their advisor, Boston Consulting Group, Union Bank is setting up a Mergers & Acquisitions (M&A) Advisory Cell to cater to its corporate customers, anticipating increased M&A activity in the coming quarters. Nair, an award-winning performer at Corporation
Bank and Dena Bank, believes in doing everything professionally, and has deputed 30 officers at various levels for training at Indian School of Business, Hyderabad, for handling their M&A operations. Together with internationally experienced Executive Directors TY Prabhu and S Raman, this Chairman had embarked upon ‘Project Nav Nirman’ for transforming the bank to a customer-centric marketing organization, since he took charge. Union Bank has also tied up with IIM-Ahmedabad for fostering research on SME segment. The 25,000+ strong Union team is working in clockwork harmony to take the bank from its current level of Rs. 2.23 lakh crore business-mix to one of India’s top-three nationalised banks by 2012. Maybe it is not only hard work, but blessings. After all, how many banks in India have been blessed to be inaugurated by Mahatma Gandhi?
2006, 2007, and 2008 were important years for Union Bank in more ways than one. On the leadership side, the bank got its current top-three executives during these years. Chairman & Managing Director MV Nair came in April 2006, Executive Director TY Prabhu in June 2007, and Executive Director S Raman in October 2008. Chairman MV Nair is the architect of Project Nav Nirman, which he kick-started soon after taking charge of the bank. The project aims at transforming Union Bank to a customer centric marketing organization by leveraging technology, redefining business strategies and re-engineering the business processes. A veteran of Corporation Bank, he has several innovative firsts to his credit there – from implementing Cash Management Services (CMS) for corporate customers to setting up a Marketing Division, something unheard of in public sector banks. Executive Director TY Prabhu is a Canara Bank veteran, and has handled Canara Bank’s wholly owned subsidiary in Hong Kong. After returning to India, a highlight of his long string of achievements is the handling of Canara Bank’s IPO. Executive Director S Raman is a Bank of India veteran, and has handled BOI’s operations in UK & USA. He was Chief Executive of US Operations, before joining Union Bank. His strengths include personal knowledge of most banking markets in India, as well as deep exposure to corporate banking, international banking, and HR. Gone are the days when banks were for saving and taking loans. Driven by globalization, the banking industry started providing a whole range of services to every possible customer group – students, farmers, entrepreneurs, corporates, societies etc. And technology came in at the right time as the enabler. Though MNC banks could be credited with introducing some of the innovative services, it was a handful of public sector banks like Union Bank that excelled in innovation plus reliability. Here is how Union Bank’s offerings serve your dreams.
MV Nair, CMD and TY Prabhu, Executive Director
Mr M.V. Nair, Chairman & Managing Director, Union Bank of India (left); Mr Rajesh Doshi, Senior Executive Director, National Securities Depository Ltd; and Mr Alok Kumar Agarwal, Chairman & Managing Director, Alankit Assignment Ltd,
INTERNET BANKING
Union Bank, Now at Your Home or Office Union Bank customers can avail of the bank’s extensive internet banking services to make their office or bank function as flexibly as a bank branch. All possible transactions and queries are included like detailed account information, transfer of funds, payment of bills, issuing DD/cheque book, FD opening / renewal, changing postal address, email address / communication module, trade module for LCs, bills, contracts etc, and bulk upload of debit / credit transactions. TELE BANKING
Your Phone is a Union Bank Executive One of Union Bank’s fastest growing services, tele-banking, literally makes your mobile or land phone do all the banking work. Union’s tele-banking services include balance enquiry, last five transaction details, order statement of account by post / fax / email, requesting cheque book, cheque status enquiry, stop payment request, and funds transfer to own accounts. ONLINE DEMAT
Union is Your Online Helper in Stock Markets Demat services are increasingly moving from depositories and brokerages into banks, and Union Bank is very active in this space with full services and an online option too. Offered services by Union Demat include opening and maintaining of demat accounts, dematerialization, rematerialisation, purchases, sales, pledging and unpledging, safe custody, detailed transaction statements, nomination facility, freezing, defreezing etc. ATM SERVICES
Union ATMs are the Friendliest ATMs Free access from other-bank ATMs were made mandatory by Reserve Bank, starting from this financial year. But at Union, free access from other-bank ATMs were always practised. Features of the ATM plus debit card include free insurance against accidental death of Rs. 2 lakhs, daily withdrawal of Rs. 50,000 (Rs. 25,000 from ATM and Rs. 25,000 for purchases), multiple account access, add-on cards etc. The bank is augmenting its friendly ATM network with another 500 locations. CREDIT CARDS
Indian Home Minister P. Chidambaram, right, inaugurates the 2501st branch of Union Bank of India (UBI) in the country, as Chairman and Managing Director of the UBI M.V. Nair
The real mettle of a bank is measured in its loan portfolio – how broad it is, how flexible it is. Customers need loans for their needs, and they need it when there are needs. Very few banks realize this basic fact. This is especially true of retail or consumer loans divisions. But a look at the Union retail portfolio is really refreshing. There are 'Union Home' for home loans; 'Union Top-up' for any expenditure connected to existing house; 'Union Miles' for cars and two-wheelers; Union Comfort' for consumer durables or personal expenses; 'Union Education' for higher education; 'Union Health' for doctors to start a clinic or buying medical equipments; 'Union Mortgage' for meeting wedding expenses, emergencies etc; 'Union Shares' for funding individuals, brokers, and corporates against approved scrips; 'Union Cash' for meeting emergency financial requirements; 'Union Smile' for pensioners; and 'Union Reverse Mortgage' for senior citizens against own, occupied property. HOME LOAN LIFE INSURANCE
Union Visa Makes Credit Union Covers Your Family’s Risk Taker Cards Accessible Union Bank makes the entry conditions easy. If you are salaried, minimum criteria is Rs. 60,000 per annum; if self-employed, it is 80,000 per annum; and if you can’t produce an income proof, a minimum unencumbered deposit of Rs. 25,000 would do! Shop at over three-crore member establishments across the globe. You can spend up to 25% of your annual income. Enjoy up to 50 days of free credit on your purchases. Add-on features of Union Visa include free accident insurance and a rewards program that can be used to waive of annual renewal charges. RETAIL LOANS
A Lender in Need, Union is a Friend Indeed
Availing a home loan is a difficult decision. Still, dads, moms, hubbies, and bros do it for their families. But who will cover them? If something unfortunate happens to the family’s risktaker, the whole family can be in chaos due to the unresolved home loan. Union solves this problem by providing life insurance cover equivalent to the amount of the outstanding home loan. The Union Home Plus scheme provides complete security to the family in the event of an unfortunate death of a Union home loan borrower. The insurer, SBI Life, assumes the full responsibility to repay the balance loan amount in the event of death. Features include top ceiling of Rs. 50 lakhs, single premium for entire duration, additional loan to provide premium, income tax rebate for premium, tax-free death claim, coverage of death due to any reason etc.
ONLINE BILL PAYMENTS
Union Customers Won’t Stand in Bill Queues Paying your bills in person and on time is one of life’s remaining hassles. You have to pay numerous bills just to survive – telephones, cellular phones, electricity / water / LPG utilities, insurance, mutual funds, credit cards, and what not. Union BillPay can come to your rescue. All you need is a net connected device – mobile, kiosk, or computer. In fact, you don’t even need any device. Just provide standing instructions and Union BillPay would do the rest. The program covers all major billers in your city, and you can even request to add one of your billing service providers. Even major charities, religious donations, and magazine subscriptions are covered. No more late payments, no more depositing cheques, and no more queues. CORPORATE BANKING
Union Sharpens Your Competitive Edge Corporate banking has graduated from mere trading loans. Union Bank provides an impressive array of products and services that any discerning businessman would appreciate. Because, they are the tools of modern business finance. Consider Union’s Cash Management System (CMS) for corporates. Multilocation collections and payments of a company are
effected at high speed. Bank’s courier will collect cheques from a company’s customers or dealers. Running over a dedicated, state-of-the-art Wide Area Network (WAN), CMS enables collection of funds at the source of origin, central pooling of funds, and centralised control of receivables and disbursals. Union’s CMS centres number 74 and there are over 1550 locations for collection of outstation cheques. GIANT INDUSTRIES TO SMEs
Union Cares for Businesses of All Sizes Financing large industrial and infrastructure projects calls for loan syndication, and Union Bank has been an early mover in this segment. Union has agreements with IDFC and Bank of India to jointly finance such large projects. Union Bank is also your perfect partner for international business with tailor-made solutions for exporters and importers, foreign currency loans, and correspondent banking with 400 international banks in 80 countries. But all these cutting-edge solutions don’t mean that the SME segment is neglected. In fact, Union Bank has one of the largest customer bases in the country’s SME segment, thanks to well-thought-of products like Union High Pride, Union Procure, & Union Supply.
Deposit Ambitions, Withdraw Success! ONL Y @ VIJA YA BANK ONLY VIJAY
You figure in their plans. We are not confident to say this about any other bank. Because, you can be anybody. A high-flying businessman, a budding entrepreneur, an NRI, a professional, an employee, a housewife, a student, a couple, a farmer, a self-employed person, or even a person looking for employment. And your net-worth can be anything high, medium, or low. Still, we repeat – you figure in Vijaya Bank’s plans. Walk into any of their 1000 branches across the country, and discover what they have in store for you. Believe it or not, they have plans for everyone - companies, agri-businesses, self-help groups, investors, and every kind of retail banking customers. Yes, even if you have only ambitions to deposit, and have to withdraw successes. Vijaya Bank also provides a technologically updated service – with over 80% of business coming under the Core Banking Services (CBS) platform and services available through a 13,200 strong ATM network. Chairman & Managing Director Prakash P Mallya and Executive Director T Valliappan are inspiring the 11,250 member strong Vijaya Bank to live up to their corporate motto – a friend you can bank upon.
Banks are becoming bigger by the day, while their customers are made to feel smaller and smaller by this growth. Banks are coming from abroad, banks are merging, banks are changing names, banks are getting swankier offices, and banks are focusing more and more on high-margin operations. Like servicing high net-worth individuals, for instance. The new-generation banks will come to such individuals, and even push a loan or two down their throat. But where will medium or low net-worth individuals go for their banking needs? People struggling to come up in life - students, farmers, small scale entrepreneurs, ex-servicemen, low-salaried employees, housewives, self-employed people etc – often exhibit great financial integrity, and are in need of funds, but will never win a bank’s favour. Forget loans, they aren’t even encouraged to be small depositors in many banks, these days. Vijaya Bank too is growing at a steady pace. But here, all medium and even low net-worth individuals are welcome. In fact, this is one bank which has always hitched its fortune to the prospects of the ‘struggling-to-come-up’ India. And when this India delivers – like it is happening now – the fortune of Vijaya Bank also soars. Says Prakash P Mallya, CMD of Vijaya Bank, “Even now, 42% of our credit goes to the priority sectors.” This banking veteran doesn’t buy the argument that such credit can be risky. “We have financed tens of thousands of self-help groups (SHGs) across the country, and its recovery rate has been 95%”. Yes, the needs of ‘small people’ are successfully met here. As Union Finance Minister P Chidambaram eloquently put it, “Vijaya Bank has proved that small can be beautiful, efficient, effective and capable of rendering services to small people such as farmers, students, women and all those who need micro-credit.” The Bangalore-based bank is, however, a strong player in industrial credit too with several blue-chip companies as customers. However, in this segment also, Vijaya Bank has a strong focus on Small & Medium Enterprises (SMEs). While 2006-07 was their platinum jubilee year for which they set and surpassed the Rs. 50,000 crore business mark, the current year’s performance is also formidable. For the first six months of this financial year, total business has increased by 33.73% to Rs. 68,980 crore, total deposits by 31.98% to Rs. 42,169 crore, and gross advances by 36.59% to Rs. 26,811 crore – all calculated in comparison with the halfyear ended on September 2006. The net profit also showed the upward trend, rising by 23.80% to Rs. 216.60 crore. However, operating profit for the same period took a hit, declining from Rs. 339.98 crore to 315.82 crore. Explaining this phenomenon, CMD Prakash P Mallya says, “The low net interest margin of 2.61% was a problem. By the end of this financial year it will be sorted out. The bank also went for short-term credit at low margins instead of long-term loans. In any case, we will close March 2008 with a profit of Rs. 425 to Rs 450 crore.”
When it comes to the social commitment angle, Vijaya Bank’s performance is very impressive in this half year. Priority sector credit increased by 22% to Rs. 10,319 crore, agricultural credit increased by 16% to Rs. 3017 crore, and advances to Micro, Small, & Medium Enterprises (MSME) doubled to Rs. 2960 crore. Says Executive Director T Valliappan, “We are planning to achieve a total business of Rs. 76,000 crore by the year end, with the ultimate aim being Rs. 1,00,000 crore by 2010.” In this march towards a trillion, Vijaya Bank is taking every step to ensure that the customer experience is enhanced. In August, the bank became part of the National Financial Switch, thus enabling the 2.70 lakh ATM-cum-Debit Card holders of the bank to use the services of over 13,200 ATMs spread across the country. Over 83.41% of the bank’s business is today carried out on the Core Banking Services (CBS) platform, taking customer friendliness to new levels. Chairman Mallya is known to take even difficult decisions with ease. He recently pulled out the bank from a joint insurance venture with Punjab National Bank and Principal Financial Group of USA, when the JV met with some technical snags. Now Vijaya Bank wants to go it alone in the insurance sector. Says Mallya, “The insurance market in the country is very huge and we want to take complete advantage of the opportunities available. We want to do a proper due diligence and take an appropriate decision that is beneficial to our bank.” With such decision-making capabilities in their leadership, the corporate future of Vijaya Bank also looks very promising.
11,500 Smiles, 500 Billion of Trust, 75 Years of Wisdom!
VIJAYA BANK
On 23rd October 2006, Vijaya Bank didn’t complete just 75 years of existence. The 11,500 odd team members of this Bangalore based bank, proved that the public sector can indeed compete – even with the agile multi-national banks of the private sector. In the platinum jubilee year, Vijaya Bank crossed the Rs. 50,000 crore (Rs. 500 billion) business mark, and that too, in style – with both per employee and per branch business growing northwards, and thus shutting the mouth of irrational privatisation. Also, unlike the solely city-based operations of many new generation banks, Vijaya Bank has branches in all 23 states and in 3 union territories of India, and is active on fronts like micro-credit. However, it should be noted without fail that the Vijaya Bank team led by Chairman Prakash P Mallya, and Executive Director T Valliappan, achieved these landmarks by incorporating some of the best lessons from private enterprises – pristine customer service and state-of-the-art information technology infrastructure. With all its 923 branches computerised, core banking solution (CBS) from technology majors like Infosys & Wipro already implemented, and 128 networked ATMs countrywide, Vijaya Bank is indeed in an enviable state. With Bangalore growing to unprecedented levels, and other Karnataka cities like Mangalore, Mysore, Hassan etc, picking up surprisingly fast in the IT & BPO sectors, this bank with its majority footprint in Karnataka, is all set to scale greater heights in the coming years. But with its roots tracing back to farmers’ welfare, and with its overriding ethos of public service, one thing is sure – Vijaya Bank will never ever forget its social responsibilities.
Vijaya Bank has branches in all 29 states and 3 union territories of India. Prakash P Mallya, Chairman & Managing Director
75 years old, or 75 years experienced? That was the difficult question the 11,500-odd team-members of Vijaya Bank faced, one year back, when their Platinum Jubilee year started. The entry of highly competitive private banks from India and abroad, into the consumer banking scene, had in no doubt created a tough playground for older public sector banks like Vijaya Bank, who have to maintain socially responsible services also in their portfolio. Started in 1931, by late AB Shetty, Vijaya Bank is one of the oldest banks in the country. Nevertheless, the management and employees of Vijaya Bank gave themselves a target for the Platinum Jubilee year – reach Rs. 50,000 crore in business. On April 1st 2006, the Vijaya Bank team got a shot in its arm, when Prakash P Mallya, highly experienced banking professional and former Executive Director of Syndicate Bank was appointed as the new Chairman & Managing Director. By late October, the new Chairman had something interesting to divulge to the press – the 11,500 member team had not only achieved the target, but surpassed it by clocking a business of Rs. 51,581 crore! Even more importantly, the average business per employee went up from Rs. 3.63 crore to Rs. 4.18 crore – thereby silencing the often-cited complaint against public sector banks, i.e., poor employee productivity! And crossing the Rs. 50,000 crore mark in style, was no gimmick. Because, during this period, the average business per branch had also gone up from Rs. 45.55 crore to Rs. 55.52 crore, thereby indicating that this surge was a healthy phenomenon, justifying the branch-wise expansion. This success is even more remarkable, as Vijaya Bank is a real grassroots level bank with branches in all 28 states and in 3 union territories of the country – altogether 923 branches! The bank is also active on the micro-credit front. During the recently concluded Platinum Jubilee celebrations of Vijaya Bank, Union Finance Minister P Chidambaram, who was the Chief Guest, said, “Vijaya Bank has proved today that small can be beautiful, efficient, effective and
capable of rendering services to small people such as farmers, students, women and all those who need micro-credit.” On the same occasion, Karnataka Chief Minister HD Kumaraswamy, opined, “Vijaya Bank is a major success story and I am proud that it is from the state of Karnataka. I feel it should be a role model for other banks too as it has made profits from providing micro-credit and provided to the agrarian society and women folk. It therefore, has a special place in people’s hearts.” The Vijaya Bank scrip has also been a darling of the bourses, for some time now. What is the secret behind Vijaya Bank’s blistering performance? A bank doesn’t excel consistently without visionary leadership and committed employees. But in the new millennium, success has become tougher with banking performance being increasingly determined by technology deployment and customer service. In fact, technology has been one area that Vijaya Bank embraced wholeheartedly. By October last year itself, all the 923 branches had been computerised. Besides this, the bank has installed 128 ATMs at its branches. The bank’s core banking solution (CBS) is impressive, being provided by industry leaders like Infosys (Finacle) and Wipro. Incidentally, such a coming together of these tech-giants is a rare gesture, signalling the respect and promise Vijaya Bank commands in the market. Vijaya Bank has also implemented automated software solutions for preventing money laundering.
All 923 branches of Vijaya Bank have been computerised.
Vijaya Bank
VIJAYA BANK
The Bank had also diversified into new areas such as credit card, merchant banking, hire purchase & leasing, and electronic remittance services. Vijaya Bank is one of the few banks in the country to take up principal membership of VISA International and MasterCard International. Chairman Prakash Mallya, who had a long stint of 32 years with Canara Bank, was fortunate enough to work closely with four CMDs of this public sector giant. Noting his achievements at Canara Bank, Government of India elevated him to be the Executive Director of Syndicate Bank. Within just 9 months of his tenure there, Mallya posted several achievements - the net profit of Syndicate Bank soared to an all time high of Rs.526 crore and the CAR to 12.80% as on 31st December 2005. The Bank also concluded a highly successful Follow on Public Issue at a premium and floated its wholly owned BPO subsidiary SyndBank Services Ltd, under his guidance. Mallya is a postgraduate in Economics, and has done 2 years of research in economics as a UGC Research Fellow. He has several research papers on banking topics to his credit.
T Valliappan, Executive Director
The emergence of Mangalore, Mysore, & Hassan, apart from the amazing success of Bangalore, are strong growth predictors for this bank having its majority of branches in Karnataka.
T Valliappan, Executive Director of Vijaya Bank, is a veteran banker previously with Indian Bank. During his long tenure there, Valliappan has led his teams in numerous capacities, with his career highlight being the General Manager of Chennai Zone, the largest Zone of Indian Bank. He has also worked as the General Manager in charge of numerous departments, including Human Resource Management. Valliappan is also a widely travelled banker, having visited many countries including UK, UAE, Singapore, Hong Kong, Kuwait, & Indonesia. He is a postgraduate in science. With leaders like Prakash Mallya and Valliappan at the helm, the Vijaya Bank team has undertaken numerous initiatives to better their all-round performance, of which the focus on customer service deserves special mention. For a country-wide operation like that of Vijaya Bank, customer service includes two aspects – providing fair banking practices consistently, and providing a framework for redressal. At Vijaya Bank, fair banking practices are not there in the letter alone, but in the spirit too. The bank had come out with a Citizen’s Charter, way back in October 2000. The uniqueness of this document was that it was
VIJAYA BANK prepared in consultation with the bank’s customers. Though not a legal document, Citizen’s Charter clearly spelt out the services rendered by each of the bank’s branches, towards its customers. The Charter also included a list of directives to be followed by the customers, so as to ensure fair banking practices. The list of services rendered by the branches, as spelt out in this Charter, was very effective in garnering customer confidence. It ranged from a simple guideline like ‘Render courteous services’ to relatively complex ones like ‘Display time norms for various banking transactions’. Under this time norm scheme, an updation of passbook should take only 5 to 15 minutes, issuance of demand draft or traveller’s cheque should take only 15 to 25 minutes, and opening of an account should take only 20 to 25 minutes. These guidelines empowered both the customer and the employee – while customers could pre-plan their valuable time, employees obtained a reasonable time-frame within which each activity could be reliably completed. Some of the other service guidelines in the Charter will come across as excellent by any bank customer – “Attend to all customers present in the banking hall at the close of business hours”; “Pay interest for delayed credit of outstation cheques, as advised by Reserve Bank of India (RBI) from time to time”; and “Accord immediate credit in respect of outstation and local cheques up to a specified limit subject to certain conditions, as advised by RBI from time to time”. The fair banking guidelines that the customers are expected to follow, as per this Charter, is also very effective. It ranges from the simple like “Avail services such as ATM, ECS, EFT etc if offered by the branch”, to normally overlooked
In the platinum jubilee year 2005-06, both the per employee business and per branch business recorded robust growth.
Suitable Picture
VIJAYA BANK
Union Finance Minister P Chidambaram said, “Vijaya Bank has proved today that small can be beautiful, efficient, effective and capable of rendering services to small people such as farmers, students, women and all those who need micro-credit.”
aspects like “Avail standing instructions facility for repeat transactions”, and to critically important ones like, “Not to sign blank cheques. So also do not record your specimen signature either on passbook or on cheque book”. However, even with all such customer-friendly measures, it was not smooth sailing for Vijaya Bank, until this year. In fact, exactly one year back, the Bank had entered its Platinum Jubilee year in a lacklustre manner. The financial year 200506 had ended on a sad note with net profit down to Rs. 127 crore from Rs. 381 crore. But the turnaround it achieved in this Platinum Jubilee year is remarkable. Already, during the first half of this financial year, Vijaya Bank has registered a net profit of Rs. 175 crore, thereby signalling not only a turnaround, but about a brighter future than ever before. But this miracle was achieved with some hard work. The focus on recoveries was given momentum, while credits faced stricter monitoring. With these tough measures, the level of net non-performing assets (NPAs) was brought down to 0.6% this September, down from the 1% a year ago. The bad loan coverage ratio was also improved from 68.1% to 78.5%. However, such tough regulatory measures don’t mean that the Bank grew even a bit timid on the business front – Vijaya Bank recorded a healthy 24% growth in business volumes for this September quarter. Sensing correctly that containing costs will have a greater say in determining earnings growth, Vijaya Bank also focused on this front. Increasingly, technologybased initiatives are found to be the prime operating cost cutter in the banking sector, and Vijaya Bank’s strong implementation of technology proved helpful. Having reached the business target of Rs. 50,000 crore six-months ahead of schedule, the bank has set itself a goal of Rs. 60,000 crore to be achieved by the financial year 07. The stock market, especially those segments that invest for the long term, has regained its faith in the Vijaya Bank scrip. Apart from the current year’s strong performance, there are some key points that the 1 to 2 year stock investors find attractive about the bank. Firstly, the
VIJAYA BANK
bank’s credit is still only 61% of its deposits, and there is still scope for increasing its loan book. Obviously, this measure can increase margins and profitability. Secondly, Vijaya Bank’s investment portfolio is largely insulated from the interest rate risk, as over 70% of its holdings in government securities are under the held-tomaturity (HTM) category. Now in a growth mode, Vijaya Bank is coming up with elaborate plans to consolidate and diversify its business. By next year, Vijaya Bank is planning to acquire an established bank with ample number of branches in West & North India, so as to complement their strong presence in the South. Going even one step ahead, to overseas markets, Vijaya Bank has already applied with RBI for opening branches in Dubai & Hong Kong, and a representative office in China.
The bank’s core banking solution (CBS) is impressive, being provided by industry leaders like Infosys (Finacle) and Wipro. Incidentally, such a coming together of these tech-giants is a rare gesture, signalling the respect and promise Vijaya Bank commands in the market.
Karnataka Chief Minister HD Kumaraswamy, opined, “Vijaya Bank is a major success story and I am proud that it is from the state of Karnataka. I feel it should be a role model for other banks too as it has made profits from providing microcredit and provided to the agrarian society and women folk. It therefore, has a special place in people’s hearts.” Vijaya Bank is also getting into the life insurance sector by early next year, through a joint venture with Punjab National Bank (PNB), US-based Principal Group, & Berger Paints. The bank is also planning to enter into a tie-up with the India Infrastructure Finance Company (IIFC) to jointly fund infrastructure projects. In tune with the current trend of nationalised banks forming alliances to cut costs by infrastructure sharing, Vijaya Bank is scouting for a synergistic alliance partner too. “An alliance is different from a merger. Such alliances facilitate sharing of IT infrastructure, ATMs, treasury resources, loan syndication, capital market, international forays, and e-payment systems between the partners. However, the alliance partners would maintain their individual identities and would continue to compete with each other,” says Chairman Prakash P Mallya.