With an inheritance of 96 years, the Thrissur -based South Indian Bank is now focusing on supporting companies in the communities around its branches, so that they can grow in time and sufficient financing.
“Our nuclear philosophy is to be a ‘by-cycle money shooter’ who is not only in good times by family businesses, but also during challenging periods,” says Prseshadri, director and CEO of the bank.
He explains that although business cycles are inevitable, most banks tend to support customers only when times are favorable and withdraw during decline. “We want to be different. As soon as we understand the long-term vision and the dedication of a company, we strive to be a partner market cycles through all phases.”
Question: Can you enter this approach?
Many owners of small companies excel in what they do, but may not have a strong understanding of financial management, in particular the cash flow. Take, for example, companies that trust cotton as an important raw material. When the cotton prices fall, they often rush to buy bulk, so that the working capital is locked. If the prices are falling further, they are stuck – able to quickly convert that inventory into finished goods.
That is where we intervene. Our role is to help them generate sustainable profit through good business practices, rather than speculative buying. We are not here to give advice, but to act as a trusted partner – someone who listens, understands and adds value.
This approach is not intended for everyone. We focus on real, hard -working entrepreneurs who are committed to building their business in the right way. Because we are closely linked to local communities, we see ourselves not only as lenders, but as long -term advisers for small companies.
What is your strategic vision for the next 1-3 years? Where do you see the growth coming from?
Our strategy is to get in touch with customers through conversations, to understand their needs through branches, call centers or every platform where we can communicate. We are aimed at all individuals, companies and large companies. In the past year we have made 12 new systems and processes to help our employees to better go and offer suitable solutions. But it starts with customer involvement. Our goal is that if we can involve our customers and our employees have the tools to offer all our products, we can understand and fulfill their needs.
In this tax we are fairly certain to bring a significant growth in the MSME balance. The growth of assets would be to the north of 12 percent and with the change in the Activamix; The growth would largely come from MSME, Retail and other such asset categories. In general, we focus on 12-13 percent growth on progress and 11-12 percent on deposits.
Do you think that managing margins will become a challenge with the rates that must be trend in the coming quarters?
In the scenario for relaxing interest rate, the challenge is mainly on the margins, because the financing costs only have a lagging effect of the REPO rate rate. We will have to lower the financing costs, because a considerable part of our loans has already been priced with a reduction of 100 basic points. In the case of deposits that we have already contracted at a certain rate, we cannot change this and we can only revise the rates for the deposits that are contracted on a continuous basis.
The rates we offer on deposits are also powered by what others offer on the market. The complete austerity advantage has not yet been passed on to deposits. There will be some pressure on the proceeds in the short term until we can lower our costs of funds. We have taken a few steps to lower our deposit rates. But the overall speed environment has fallen more than that. Yes, managing the margins becomes a challenge.
What are your plans to take the pressure from the margins and to improve profitability?
The focus areas will be MSME and Retail fronts that are the high task of assets. The growth rate of business advances will be much slower. The whole idea is to cycle from the low yielding progress and cycling in high production. We will get the MSME and the retail trade in sufficient quantities and then gradually weaning ourselves from the company book. Since most of these loans are in the nature of a very short duration, we can manage this effectively.
So the first order of the business community is to grow Retail and MSME, so that most of our growth meters are tackled by those two engines. And then we have the option how many of the companies we retain and how much we give up. We will manage the balance dynamically.
Our focus will be on cheap funds on the liability side. As the interest regime in the market falls, the difference between CA and SA and term deposits will also fall. The opportunity costs not to move the money from Casa to TD are not that much either. Our opinion is that the market will grow faster this year CA and SA than last year.
How do you view the new RBI standards on golden loans?
The new rules offer clarity about what can and cannot be done. Intensive credit insurance is not mandatory for loans under £ 2.5 Lakh. But furthermore that full credit insurance is now required.
This means that we have to verify the repayment of the borrower that adds more steps to the process. We are currently adjusting our systems and protocols to coordinate with these changes.
How are you planning to help your digital initiatives move forward?
We redefine our digital strategy to work as a separate income -generating unit by using opportunities of pure digital channels. Our vision is to forge strategic alliances with fintechs and digital ecosystems to speed up our digital transformation trip. The core objective is to improve banking experience by tackling the limitations of traditional branch banking, while the costs are optimized and scalability.
In recent months we have built three robust digital assets: a blog and the vlog channels of the fincredibles in both English and Malayalam. These platforms have received an encouraging reaction and play a crucial role in stimulating digital involvement and customer acquisition.
In the past year we have launched various digital products to deepen our presence on the market and to streamline customer travel, including fast personal loan; Fast FD and GST power.
On the Co-Loingen front we are collaborated with various leading fintechs and NBFCs. We believe that these collaborations will play an important role in expanding our credit portfolio and scaling up our digital possibilities.
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