`All financial solutions under one roof'

V.K. Chopra, Chairman and Managing Director of Corporation Bank. - BY SPECIAL ARRANGEMENT

Corporation Bank is on the verge of completing its 100th year of existence. The bank's strengths, according to its chairman and managing director V.K. Chopra, are its strong capital base, low level of non-performing assets, adoption of latest technology at all levels and consistent track record of good performance, dividend distribution and adoption of good corporate governance practices. Excerpts from an interview Chopra gave Ravi Sharma:

Given the new financial regime under which public sector banks are forced to operate, what is Corporation Bank's strategy?

The new financial regime has not necessarily restricted public sector banks in reorienting their growth strategies. It has, instead, thrown open quite a few challenges. Corporation Bank, which was one of the first to take advantage of the changing situation, will continue to follow a controlled aggressive path for business growth. Encashing on its strong asset quality, loan growth, [adoption of] high technology, better operating efficiency and reasonably higher Tier I capital, Corporation Bank has drawn up plans for market penetration in all segments. With the advent of financial sector reforms, competition is engulfing the entire financial system and the maxim `survival of the fittest' applies equally to all banks. Corporation Bank has, against all odds, emerged stronger than it was earlier.

What are the bank's areas of focus?

In line with the Government of India's directions, the bank lays strong emphasis on micro-financing. Agriculture, the retail segment and the small and medium enterprise segment are the other areas of focus of the bank. Its success lies in the fact that it could raise bars to meet the customers' requirements in a proactive manner through innovative product/service delivery. It is also focussing on providing high-quality, low-cost services and reaching clients with multi-channel delivery and techno-based products in order to retain the existing business and gain new business. With forays into bank assurance products, distribution of mutual funds products, gilts, project finance and so on, the bank has become a financial conglomerate by providing all financial solutions under one roof.

The bank also lays strong emphasis on adopting best practices, especially in the area of risk management, credit management, corporate governance; ensuring soundness of the system by adhering to capital adequacy and prudential norms; and achieving technological excellence.

Is there a level playing field for public sector banks vis-a-vis multinational and Indian private sector banks?

Every player likes to play the game according to his strengths. Public sector banks score over multinational and Indian private sector banks on the ownership front. It goes without saying that the entry of `new generation private sector banks' and the aggressive stance of foreign banks has really done a great deal of good from the customer's point of view. Equally, from the banker's perspective, competition has triggered the need to improve the efficiency level and customer orientation. It may not be untrue that on certain counts private sector banks do have an added advantage. However, it is equally true that public sector banks have realised the necessity to follow a professional and business-oriented approach. It is the customers who set the pace and banks have to break the air. It is true that the new generation banks/foreign banks have started their operations with a clean slate but that is not the case with public sector banks. But we have overcome these inhibitions and today the non-performing asset levels of most of our banks are less than that of their counterparts in the private sector.

The bank has also entered the area of non-fund-based banking.

As a part of the strategy to increase the fee income and also to optimise the use of infrastructure, Corporation Bank has entered into tie-ups with reputed mutual fund (consultants) for distribution of mutual fund products. Corporation Bank is the corporate agent for bank assurance products for the Life Insurance Corporation of India. The bank has started selling gold on a consignment basis and the cash management services of the bank are a phenomenal success, contributing a hefty sum to the bottom line.

The financial reforms process has gone on for more than a decade. Has the process matured?

The financial sector reforms commenced in the early 1990s and brought about a sea change in the way banking is done. Indian banking has lived up to the expectations of the regulators and the public by quickly adapting to the changes. Reforms are a continuous process: Basel I is now paving way for Basel II, and recognition of operational risks alongside credit and market risks. The relaxation of foreign direct investment guidelines is a pointer to the ongoing reforms.

What technology and customer innovations have Corporation Bank introduced?

Corporation Bank has already brought 482 units under core banking solutions, covering 81 per cent of its overall business. This figure will go up to 90 per cent by March 2006. With 814 automatic teller machines, Corporation Bank has the second largest ATM network after State Bank of India. The Bank has also tied up this network with other major banks. Internet banking is now available in 675 branches, covering 64 cities. In addition, 27 branches that handle foreign exchange have been brought under core banking solutions.