Email
Print
Text
ShareTargets 40% share of low-cost deposits, up from 35% now
BANGALORE: Corporation Bank sees common sense in charting uncommon territory.
The bank has laid down a roadmap to expand its branches to unbanked parts of the country.
Hitting the country roads, the Karnataka-based public sector bank will open close to 150 branches in unbanked areas across India and expand its branchless banking services to 200 other villages, a senior bank official said.
With this expansion, the bank hopes to increase the subscriptions to its current and savings accounts (Casa), which currently accounts for 35% of its deposits, to over 40% in the next two years, said B R Bhat, its general manager.
The bank uses state-of-the-art biometric smart cards and voice-guided systems to provide branchless banking through appointed business correspondents in many remote areas.
The is bracing for a hit on its net interest margins (NIM), a measure of the core investments of banks, due to regulatory tightening aimed at curbing inflation. The net interest margin for the company as on March 31st was 2.8%.
The bank pays no interest on its current account and 3.5% interest for its savings account; while for a 13 month fixed deposit, the bank is liable to pay around 9.5% interest.
Hence the stress on increasing the Casa component.
Bhat said, "The inflationary conditions will persist for a while. Hence to prevent further erosion of our net interest we have planned to expand our Casa base."
The bank is also looking to increase its income from fee based sources to prevent the erosion of its earnings. "This 2.8% NIM level is not sustainable for long under these conditions. We have to depend on non-interest income seriously going ahead," said Bhat.
For example, in the credit cards division, the bank is looking to expand its customer base. It has so far issued some 50,000 credit cards and is looking to aggressively expand this. "Previously we only issued credit cards to our bank clients. However, now we are looking to sell them to our non-banking clients too," Bhat said.
In July, the bank launched a 'compassion campaign" aimed at adding 1 million savings accounts in 100 days. Under the scheme a sum of Rs 10 from each saving account created would go to charity. Bhat said that the bank is in line to meet its target.
Since March, the bank has added around 60 branches across the country to take its total number to 1,020.
Corporation Bank has also tied up with Bangalore-based software technology provider Idenizen Smartware to issue a debit card called 'Smart Campus' for college students.
