Excerpts from the interview:

How has the performance of Bharat Overseas Bank been, given the tough economic scenario? And how have you faced upto the new RBI regulations on NPA's?
During the last three years we have been consistently registering growth, whether it is in the area of deposits, advances, net profits, or operating profits.
In the last financial year, we made a net profit of Rs.28.52 crore as compared to Rs.22.75 crore in the previous year. The bank's aggregate deposit stood at Rs.2149.10 crore at the end of the last financial year as against Rs.1823.26 crore in March 2002. The Net NPA levels have been brought down to 3.31 percent from 4.38 percent.

We are aiming to reduce NPA's to around 3% before the end of this financial year.
Revised RBI guidelines on overdue advances being considered as NPA's are tough. But our performance is good in these areas.

What about net owned funds, and the capital adequacy ratio?
Our net owned funds registered a 14.04 percent increase from Rs.123.03 crore in March 2002 to Rs.140.30 crore in March 2003. This year we hope to have at least 20 percent growth in net owned funds.
The capital adequacy ratio stands at 13.87 percent as of March 2003 and we would like to keep it as much above the RBI norms as we can, which at present is 9 percent.

How has your customer base grown over the years?
Today, we have about 4.5 lakh customers. The rate of growth has been 15-20 percent per year. But in the next three or four years, with the central banking solution in place, more and more employees of the bank will be drawn into marketing and product promotion. With their efforts I hope to increase our customer base to 10 lakhs. It should be possible with the IT infrastructure at our disposal.

What is your business strategy for the future?
The bank is identifying several profit centres within the bank like inter bank deposits (IBDs), derivatives, and business from Forex. Other profit centres are also being developed and it should help us concentrate on profit orientation of our operations, by giving good customer service. The bank would like to play an active role in two segments; retail banking relating to individual segment and to SMEs (small and medium enterprises). Based on our business profile and our manpower efficiencies, we think these are the two areas where we can play a vital role.
There are also plans to widen our client base and secure low cost deposits for sustained growth targeting SMEs in the range of Rs.25 lacs to Rs.300 lacs, for profitable lending.

Have you identified any new opportunities in non core areas?
New opportunities have emerged for banks in para-banking activities with the integration of financial services. While traditional banking activity shall continue to remain our mainstay, we will seek to increase our non-interest income by entering into various financial services.
However, we believe that any institution, especially a financial institution, should be strong on fundamentals. We are committed to having very strong financial fundamentals. That will be the backbone for the success and survival of the bank.
The bank has taken up a core banking solutions project with I-Flex solutions. IBM is the systems integrator and has already run trials in three branches. By June 2004 we hope to become a full-fledged bank with all our eighty branches in the network

What would that mean for the customer?
It would facilitate online remittances and 24x7 banking anywhere for our customers. It would also give us a competitive edge over banks which are still in the process of computerisation.
Once we are ready with our IT solutions and an upgraded platform, we would be offering various products targeting different categories of individuals such as the salaried class, professionals etc.
More than anything else, we strongly believe that the man behind the machine is very important. So our manpower will always be geared to maintain customer relations.
Accordingly, we have CRM desks at all our branches so as not to lose sight of the importance of building a good relationship with the customers.

P C Vinoj Kumar