A Personalised Touch To Banking - V A Vaishampayan, Chairman, TJSB Sahakari Bank

The RBI is looking out for the unbanked population to be served. When the private sector banks come in, they will mostly be in Tier I cities. After handing out banking licences to NBFCs, it will have to be seen whether they implement the RBI’s mandate.

What are the growth options that TJSB is looking at over the next five years?

In the next five years, TJSB is looking to enter all the Tier I and II cities in Maharashtra. Earlier, our presence was limited to Pune, Nashik, Mumbai and Thane. Now, we are expanding to other cities to have a better network. That is our main aim for expansion.

From where do you see growth coming in for TJSB?

TJSB has its own brand. We have the best IT-enabled services for customers along with the personal touch we bring as a co-operative bank. With these USPs, we are able to compete well in any place where we go.

What is your technology investment like?

We continuously upgrade our old systems with new technology that comes in. We have our own datacentre in Thane, three datacentres at Nashik and Pune and an additional one in Thane for disaster recovery. We are investing regularly in new technologies like cash dispensers and cheque deposit machines. For the next two years, we will be investing around Rs 20 crore. We are upgrading our main datacentre, which supports nearly 15-20 smaller co-operative banks.

How much growth in advances and deposits you have seen? Do you have any particular target in this regard?

Our average year-on-year growth is 25 per cent. This is very ambitious as the industry is growing at 13-14 per cent. We are able to maintain the rate of 25 per cent because of our expansion. For a five-year period, we are likely to grow at 18-20 per cent.

Your bank has a network of 82 branches and some extension centres. Is there any particular figure that you are looking for this year?

This year we may touch the 100 mark in Maharashtra and some places in Gujarat, Karnataka and Goa.

The RBI is issuing banking licences to NBFCs. Do you feel that these may pose a threat to co-operative banks?

No. Co-operative banks are mostly present in Tier III cities and there are ‘patpedhis’ in smaller centres. Nowadays, the branch opening cost is nearly to the tune of Rs 1 crore. When the size of a city is small, will they get business to that extent? I am not sure that plan will be viable.

So, what is the cost-to-income ratio for a branch?

The breakeven point is Rs 25 crore of business. We open a branch only when there is that much business potential.

Do you feel that some consolidation will happen in the co-operatives? Will banks like yours take over some small sized co-operative banks to expand their network?

Some consolidation has taken place four-five years ago, and we had taken over two smaller co-operative banks. As of now, the larger co-operative banks do not have the capital to acquire new banks. You might remember that Saraswat Bank has said that it will take over Rupee Co-op. Bank. With them too, the capital adequacy is not sufficient.

Can you tell us about the capital adequacy of TJSB? Are there any plans of raising it further?

This is currently at 14 per cent. Yes, we have long-term deposits of Rs 100 crore this year.
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Considering the economy and banking, the RBI has recently tightened the liquidity position. Do you feel that this will affect the banking sector as a whole?

Yes, there will be an impact because they are taking out liquidity. The costs will increase, and thus, the profitability of banks will be affected.

Do you feel that any new banks that come in will also be able to grow at the rate of 18-20 per cent?

It depends upon what model they set up the banks on. The RBI is looking out for the unbanked population to be served. When these private sector banks come in, they will mostly be in Tier I cities. After handing out banking licences to NBFCs, it will have to be seen whether they implement the RBI’s mandate. 

Going ahead, to which sector will lending grow? What will be your focus area?

Actually, ours is a balanced portfolio and we do not depend particularly on any sector as such. As the economy is not doing well, all the sectors are in same condition. Real estate lending will be a major negative factor, because that will be the first to take a hit.

How has the asset quality for TJSB been during the past two-three years? Have you seen any slippages?

In our last year’s balance sheet, our Gross NPAs have increased though they are much lesser as compared to that of other banks. The Gross NPAs are at three per cent and net NPAs are nil. So, 100 per cent is provided for.

Four-five years ago, certain co-operative banks went bust and there were some concerns and queries raised about co-operative banks. Do you feel that we have moved on from then?

The RBI has taken regulatory action to ensure that this kind of a situation does not happen again. However, the RBI mainly controls scheduled co-operative banks. Out of the total of 1600, hardly 25 are scheduled banks. For all the other banks, RBI control is very low. So, a lot of issues could be come up.

Do you feel that these issues pertain to any particular area?

Basically, it has to do with the quality of management. Wherever there is a professional management present, we do not see these things happening.

Many private banks have gone ahead with offering six per cent interest rate on savings accounts. Do you feel that the bank can sustain that competition?

Those banks which provide six per cent on savings accounts typically do not have exposure in the retail sector and are doing so in a bid to increase their presence. For YES Bank, earlier they were giving 10 per cent as their CASA deposits were very low, and now they are paying six per cent. Basically, these banks were not focused. Banks that are in retail like HDFC, ICICI or even nationalised banks like SBI are not giving higher interest rates on savings bank accounts.

People do not maintain savings bank account balance interest, but for the services they get. If you give good services, you need not give higher interest on savings accounts.

You mentioned that the personal touch you give is your unique proposition. Do you feel that this factor will take you to next level going ahead?

This is what differentiates us from other nationalised banks and privatised banks. Understanding customer needs, helping them remain in the regulatory network and still helping them in times of trouble is our USP.