The environment is tailor-made for a private player like Federal Bank to step up credit growth, according to a senior official from the bank. This comes in the context of the banking industry undergoing structural changes with regard to its focus on collections from NPAs that have outgrown expectations.
Articulating this proposition, Shyam Srinivasan, Managing Director & CEO, said that the capital adequacy of the bank provided it the necessary headroom to cash in on the emerging situation.
At the end of the fiscal year in March 2016, the bank’s capital adequacy stood at 13.9 per cent. Its gross non-performing assets (NPAs) stood at 2.84 per cent, down from 3.15 per cent in December 2015.
Given the stressed assets-induced troubles faced by public sector banks, the increasingly niche role preferred by foreign banks and the increasing propensity to wall the capital within the boundaries of nation states, according to Mr. Srinivasan, had all combined to throw players such as Federal Bank a fresh window of opportunity. “The environment is congenial for us,” he said.
Fielding a range of questions, he said Federal Bank had consciously stayed away from big-ticket and long-term infrastructure projects. Its focus has remained on retail and SME (small and medium enterprise) segments. In this context, he said the bank was moving away from the branch-centric approach to one that was relationship-based, a strategy drawn up to reach out to its clients.
According to him, “I would prefer to have a Rs 500 crore engagement across a few clients, and then through my relationship tap his vendor ecosystem, his clients and his employees, when compared to a Rs 100 crore engagement with one client.”
Mr. Srinivasan said Federal Bank would increasingly seek to play the role of a digital partner to its clients. The objective was to deepen the engagement with clients and approach them with digital offerings, start small and then go on to sell other services to the individual
The reliance on digital channels to understand the credit flow, he felt, would go a long way in helping the bank understand its clients and their spending patterns a lot better.