Union bank building digital bridge to growth as it pushes retail, SME loans

State-run Union Bank of India is turning around its growth strategy to grab the unattended retail and SME share in the hinterland where it is now equipped with the network of Andhra Bank and Corporation Bank that were merged into it. Chief executive officer A Manimekhalai, currently the lone woman chief executive of a public sector bank, said Union Bank is looking at a specialised branch-led model to achieve a 10%-plus credit growth this fiscal. Edited excerpts of an interview with Joel Rebello:

What is your plan for growth?

We have started verticalisation of our branches. We are looking at about 250 retail loan points, which will do only retail. We are also looking at about 125 MSME loan points, 30 large-corporate branches and 60 mid-corporate branches. The whole thing should be about 550 to 600 branches. Retail branches will source the loans and send them to these centralised units, which will do the processing and even disbursement. Large corporate branches will look at loans of ₹250 crore and above, and MSME branches will look at up to ₹50 crore of business. This will help us focus on credit growth and free staff from all mundane activities. We are also taking out all ₹20 lakh and above NPAs from the branches and putting them into specialised branches, which will have law officers, credit officers etc. So, as soon as the account becomes an NPA, it will move on to this. Branches will be connected digitally with even post offices. Once notices are issued they will automatically be sent to the post offices to be sent to defaulters.

Union Bank’s NPAs are is still among the highest in the banking sector…

Yes, we are outliers at 10.22% (of gross advances) and we want to reduce it further to at least 9%. It is one of my areas of concern, which I am working on. Also, at 36% CASA (current account savings account), we are one of the lowest in the industry. We have 450,000 housing loan customers, and out of that, almost 80% of them were having only less than ₹10,000 balance in their savings account. So, have asked them to maintain at least three instalments with us. We are also looking at their ancillary businesses whether we can take their salary accounts, whether we can give them equipment finance etc. On November 11, we will roll out straight through processing on mutual funds, insurance, Mudra loans, GST and personal loans. We are also looking at reducing NPAs either through the NCLT process or one-time settlement or upgradation. I will take care of it before it seeps into my NPA portfolio. We have categorised NPAs into three categories – A, B, and C, with A which we will surely be able to recover and C which is a little difficult for us to do. We are working on recovering some numbers.

How will all these changes help credit growth?

I am also looking at increasing my advances by something like 10% to 12% growth in the current year. I gave a call to every staff of mine to get two retail accounts. We have been able to do over ₹3,500 crore of retail lending over the last month through our own staff, up from the ₹1,800 crore we sourced through DSAs (direct selling agents) last year. But this is only a simple thing. My staff is involved and inclusive growth is happening. Everybody wants to be a part of the growth story of this bank. And they know there is growth, as you say the credit is growing.

There is a belief that private sector banks have an edge because they are going to places where they did not go in the past. They have started going to interiors, which has been your forte…

We know that we are losing ground there and we are picking up. We also have tied up with almost 25 fintech companies now, which we want to scale up to almost 100 by the end of the year. We have a subsidiary and I am going to recruit from there for marketing. We have got a very good spread of branches in the south, and even here too, we have got 45% to 50% of our branches in rural centres, and this we will activate.

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