`We are focussing on business growth'

Y. Vijayanand, Managing Director of the State Bank of Mysore. - BY SPECIAL ARRANGEMENT

Innovative banking solutions both in the traditional and non-traditional areas, and customer friendly measures including `8 to 8 banking' are the name of the game at State Bank of Mysore (SBM), which was established in 1913, as it confronts the challenges of making itself a complete financial house. As per the bank's `Business Plan', SBM expects to increase its business by Rs.5,200 crores during the 2005-06 financial year. Excerpts from an interview Y. Vijayanand, managing director of SBM, gave Ravi Sharma:

SBM has been strong in the retail sector.

Yes. But we are also strong in agriculture finance and are emerging strong in the corporate financing sector. We are looking for a combination of retail and corporate banking, with the former continuing to be the focus. As far as deposits go, we have a 60 per cent share in retail, and 20 per cent each in corporate and agriculture finance. In advances, the retail segment has a 45 per cent share, while agriculture accounts for the rest.

What initiatives has the bank undertaken in the agriculture sector?

We have financed widely in Karnataka and besides traditional products such as crop loans and working capital loans, we are increasing investment credit to allied activities and to self-help groups. These groups consist mostly of 20 or so women in the rural areas, which take up agriculture or start small business enterprises such as minor artisan projects. For two successive years we have been awarded the second best prize for linkages of self-help groups. We have already linked 6,000 such groups and plans are afoot to link an additional 4,000 during the current financial year.

What are SBM's priorities as it takes on increased competition?

We are focussing on business growth since this is the prime necessity to make the bank a better entity. We have been always a consistent performer and even during the difficult years we were able to turn out reasonably good results. Technology-wise we are going in for core-anywhere-banking. All our branches will be put under core banking by the end of this financial year.

As far as our business process re-engineering goes we have introduced the concept of `Raha Mitra' (friend of the customer) - where our staff help the customer understand the products of the bank and make use of the technological innovations. We have also introduced the `drop box' system, centralised (in major centres) the sanction of some loans such as retail loans and those to small enterprises, and designated (at a few centres) a relationship manager who will take care of all the banking needs of our high-end personal banking customers. Hitherto we only had a relationship manager for our corporate customers.

What about SBM's non-fund-based activities?

SBM is in the process of increasing its non-fund based activities, especially in the areas of insurance and mutual funds. Even though these activities conflict with our traditional deposit mobilisation efforts we are aware that customers should have a portfolio that is a combination of bank deposits, mutual funds and equity. If we don't offer these products, customers will go elsewhere.

SBM has shifted its treasury to Mumbai...

Yes. This gives us greater trading operations and more opportunities to look at the market. The gains will not be anything great in the immediate future but we will build our capabilities slowly to cover derivative products. As far as treasury operations go, there is not a great deal of manoeuvrability available. There being a tendency to dispose of excess securities over and above the statutory liquidity ratio requirements, only some trades are possible. As far as our regular portfolio is concerned we are trying to do a balancing act between the considerations of modified duration, yields and IFRs. A balancing act where there will be opportunities but windfall profits are not possible. During the last two years banks have been dealing only in government securities, now there are other opportunities: in equities and mutual funds. In the days to come, our participation in equity trading will be increased.