How was 2021 for banking?
It started with positive signs and ended FY 2011 with a better balance sheet. In April and May, we saw disruption due to the second wave. It was very brutal, we lost a lot of precious lives, but our men went to work and worked hard to bring back normalcy. We should also give it to the people of the country and the economy with which the economy has returned after June. Be it asset quality, stress level or collection capacity, banks are better placed pre-covid, But what happened in the first and second quarters resulted in slippage that was reflected in the first and second quarter results.
What are the lessons for the economy that can be used for the third wave?
The complete lockdown in the first wave crippled the economy. It was needed at that time and most of the countries followed this principle. The lockdown in the second wave was more location-specific. So the disruptions to the economy, supply chain and production were localised. This helped to make a quick comeback. I don’t think we will have a massive lockdown now because people have learned to take precautions. Many experts in this field say that the number of hospitalizations under Omicron is low but we are not aware of this and we have to be careful. I think we need to follow all the practices adopted during the second wave – digitizing transactions, minimizing personal contacts and avoiding big incidents.
To what extent have you been able to meet the post amalgamation restriction under your Samarth scheme?
We managed to complete the technology integration in ten months because of the plan. Today we are twice the size Union Bank and four times the size of the Corporation or Canara Bank. We have more than 5% branch market share in 15 states and our business market share in 22 states is more than 5% in business volume. We are now planning Samarth 2.0 which is to take the bank to the next level in digitization both in terms of technology and tech-savvy human resource. We have created a separate digitization department, engaged HR consultants and are recruiting experts.
What about associate companies and subsidiaries of erstwhile banks?
We are in the process of selling our stake in India First Life Insurance as we cannot hold more than one life insurance company. We are also selling our stake in ASREC (Asset Reconstruction Company). We have already renamed CorpBank Securities UBI Services And has developed it as a marketing engine. Today 40% of our retail business is generated by our 1000-strong marketing vertical. We plan to replicate this success at UBI Services.
Consolidated banks have lost market share. What is the ambition next?
In the last four-five years, public sector banks lost market share as they were on a consolidation path – fixing the balance sheet, recognizing bad loans, provisioning and raising capital and then amalgamation took place. Now, we need to focus on maintaining market share first, for which we have to move in line with the industry. I am hopeful that by the end of FY22, we will grow in line with the industry. From next year onwards we need to grow faster than the industry and the process of digitization is in line with that. We’re already at competitive prices, it’s only technology and products that make the difference. Once we have that customer there is no reason to go anywhere else. By March we will be launching our full trade finance module that gives businesses complete control from their office.
Is there any potential that has come about for good during the pandemic?
Digital transactions have increased. Today we have personal loans and Mudra loans which are end-to-end digital, even renewal of MSME loans can be done online in an end-to-end manner. I think in the next 9 to 12 months at least 25% of personal loans can be done through the system without coming to the bank without documents. The technology orientation is here to keep up with the revolutionizing fintech. Fintechs are identifying pain points for customers and introducing a product there. For me, it’s an opportunity to collaborate because they’ve already built the technology and are pretty agile. At the same time, they don’t have the balance sheet support that we do.
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