M Narendra, CMD, Indian Overseas Bank

The bank witnessed a significant business growth of 35.20 per cent in 2010-11 and as at the end of June 2011 it posted year-on-year growth of 40.49 per cent in business. The driving factors of the bank’s impressive growth include reaching out to the customers through the ‘walk-in-bank’ campaigns by all the employees at all levels for resource mobilisation and expanding the customer base, improved credit delivery through focused vertical approach viz. large and mid-corporates and SMEs.

The bank plans to add 400 branches across the country to widen its pan-India presence which will go a long way in furthering its business expansion. Also, mobilisation of the current account and saving account (CASA) is the need of the hour to keep the cost of deposits low. The bank is focusing on lending to the MSME and the agricultural sectors which are the nation’s priorities. The bank will also look for good credit proposals in the infrastructure and industrial sectors, apart from expanding other retail loans for housing and education.

We are planning to open a branch in Nepal and also proposing to take up with the Monetary Authority of Singapore for granting a qualifying full bank’s license in order to further exploit the business potential at Singapore. The bank has also taken up with the RBI for permission to upgrade its representative offices at Guangzhou (China), Al Karama (Dubai) and Ho Chi Minh City (Vietnam) into full-fledged branches. We have also sought the RBI’s permission to open an additional branch in Bangkok at Sukhumvit. The bank also plans to set up its third remittance centre at Singapore. Meanwhile, our bank, along with Bank of Baroda and Andhra Bank, is actively working towards the commencement of operations of the joint venture subsidiary established at Malaysia.

The Indian Overseas Bank offers a wide range of MSME products and services catering to the need and prosperity of our customers. Our MSME product portfolio has been tailor-made to suit individual and industry requirements as well as to meet the requirement of the SME entrepreneurs comprehensively. Apart from our traditional asset creation loans (term loans) and working capital management loans (cash credit), the following are our distinct SME products:

The MSME sector is one of the largest contributors to domestic production and export earnings with its substantial industrial output, employment generation and quality products and services. The nation has witnessed the capacity of this sector to boost the country’s economic growth by acting as a supply chain with its innovative products and services to large corporates. However, despite growth and business development, these small players do not have adequate margins to fall back on during difficult times. The present market scenario indicates that the sector is under stress with rising input and interest costs.  

No business unit can survive even with the best products and exemplary marketing mechanism if its financials are not adequately managed. Most of the small and mid-size business units lack expertise in managing their cash flows, capital expenditure planning, negotiating favourable deals with suppliers, balancing quality and costs and predicting market demand. Apart from the traditional financial management of book-keeping, working capital management and cost control, the business unit must also concentrate on the following areas for effective financial management:

The right selection of borrower with proper credit appraisal, closer monitoring of accounts and periodical guidance will help in maintaining the health of the portfolio. In case of difficulties, timely restructuring of the credit facilities should be carried out to tide over the units’ problems. This approach will keep the NPAs low and we definitely plan to bring our net NPA to below 1 per cent.

A large number of training programmes are conducted for officers and the clerical staff at our staff training college and ten staff training centres. Recently senior officers and executives were deputed to national level institutes like the National Institute of Bank Management, College for Agricultural Banking, Management Development Institute, Administrative Staff College of India, etc for specialised trainings. Senior executives were also deputed to overseas’ training programmes to gain exposure about the latest global developments and international practices. Promotion at all levels and new recruitment of officers and clerks is also taken up to take care of succession planning and support the increased business.

Our bank has a continuous history of dividend payment and its performance during the year 2010-11 has been quite impressive, thereby returning good    yields   to the investors. Further, we take every effort to ensure the wealth maximisation of the bank’s shareholders by declaring higher dividend coupled with increased book value/earning per share by attaining better performance every year.