How was 2021 for banking?
It started with positive signals and ended in FY21 with better balance sheets. In April and May, we saw disruption because of the second wave. It was very brutal, we lost a lot of precious lives, but our people went out to work and strived hard to bring normalcy. We should also give it to the people of the country and the resilience with which the economy bounced back after June. Whether it is asset quality, stress levels or collection efficiency, banks are in a better position than pre-Covid. But what happened in the first and second quarter resulted in slippages which were reflected in the first and second-quarter results.
What are the lessons for the economy that can be put to use for the third wave?
The complete lockdown in the first wave disrupted the economy. That was required at that time and most countries followed this principle. The lockdown in the second wave was more location-specific. So disruptions to the economy, supply chain and production were localised. That helped to bounce back quickly. I do not think we will go for massive lockdown now as people have learnt to take precautions. Many experts in this field say that hospitalisations are fewer under Omicron but we do not know and we have to take precautions. I think we need to follow all the practices that were adopted during the second wave – digitising transactions, reducing personal contacts and avoiding big events.
To what extent have you managed to complete the post-amalgamation restricting under your Samarth plan?
We managed to complete the technology integration in ten months because of the planning. Today we are double the size of the erstwhile Union Bank and four times the size of the Corporation or Canara Bank. We have a market share of more than 5% branches in 15 states and in 22 states our business market share is more than 5% in business volume. We are now planning for Samarth 2.0 which is to take the bank to the next level in digitisation, both in terms of technology and tech-savvy human resources. We have created a separate digitisation department, engaged HR consultants and are recruiting specialists.
What about the associate companies and subsidiaries of the erstwhile banks?
We are in the process of divesting our stake in India First Life Insurance as we cannot hold a stake in more than one life insurance company. We are also selling our stake in ASREC (asset reconstruction company). We have already renamed Corpbank Securities as UBI Services and have developed it as a marketing engine. Today 40% of our retail business is generated by our 1000-strong marketing vertical. We plan to replicate this success in the UBI Services.
The banks that consolidated have lost market share. What is the ambition going forward?
Last four-five years, public sector banks lost market share because they were on a consolidation path – correcting the balance sheet, recognising bad loans, provisioning and raising capital and then there was the amalgamation. Now, we need to focus first on retaining market share for which we have to grow in line with the industry. I am hopeful that by the end of FY22 we will grow in line with the industry. Next year onwards we need to grow faster than industry and the digitisation process is in that line. We are already at competitive prices, it is only technology and products that make a difference. Once we have that customer have no reason to go elsewhere. By March we will launch our full-fledged trade finance module which gives businesses full control from their office.
Are there any efficiencies that have come in for good during the pandemic?
Digital transactions have gone up. Today we have personal loans and mudra loans which are end to end digital even renewals of MSME loans can be done in an end-to-end manner online. I think in the next 9 to 12 months at least 25% of the personal loans can be done through the system without coming to the bank for documentation. The technology orientation is here to stay with fintech’s bringing in the revolution. Fintechs are identifying the pain points for customers and offering a product there. For me, this is an opportunity to collaborate as they have already built the technology and are quite agile. At the same time, they do not have balance sheet support which we do.