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C.R. Sukumar

Mr A. Krishna Moorthy, Chief General Manager, Lakshmi Vilas Bank

HYDERABAD, Feb. 4

LAKSHMI Vilas Bank (LVB), the Karur-based old-generation bank, is currently in the process of leveraging its strengths to address the emerging opportunities. The bank plans to aggressively market both life and non-life insurance products to its captive clientele. Apart from plans to merge its treasury and forex operations and reactivate merchant banking operations, the bank is planning to launch credit cards linked to a fixed deposit base.

The Chief General Manager, Mr A. Krishna Moorthy, spoke to Business Line at length on LVB's plans. Excerpts:

What are the new areas being pursued by LVB?

We are entering the area of marketing insurance products. The tie-up between Lakshmi Vilas Bank and Dabur CGU Life Insurance is reaching the final stages. We have considered three products — the single premium product, the group single premium product and annual premium products. Which are the geographic areas being looked at for marketing insurance products?

To begin with, LVB will be marketing the product among the self-help groups in Tamil Nadu, Karnataka and Andhra Pradesh, where we have a large presence. Keeping in view the fact that most of the private sector insurance players are entering the market simultaneously, we have decided to focus on newer areas such as self-help groups (SHGs), retail traders, the personal segment and agricultural farmers. We plan to leverage our branch network in these areas.

All the transactions will be completed online. For this, the 34 branches that have been selected for selling life insurance products will be networked. We are aiming at handing over the policies to the customer within 48 hours.

We will be launching the product before March. However, we will act only as a corporate agency. Dabur CGU has agreed to give us the exclusive corporate agency for Tamil Nadu and Andhra Pradesh. Our next target is Karnataka. We will initially focus on our captive clientele.

Are you exploring any other new avenues?

The bank plans to enter the credit card business. The board has approved in-principle our affiliation as a principal member of Visa International. Our officers are currently being trained by Visa. We are also seeking affiliation with the Asia-Pacific division of Visa International at Singapore. As a first step, we will launch the Electron card. The credit limits would be based on the size of the fixed deposit maintained by the customer.

Have you prepared any technology upgradation plans?

We engaged Global Mascon for technology upgradation. Our 38 fully computerised branches will have the new software — Lakshmi Business Solution — by March.

In the second phase, 125 of our partially computerised branches will be covered. But before that, branches will be networked on a cluster basis.

How comfortable is your capital adequacy ratio now?

LVB recently raised Rs 20.8 crore of tier-II capital. As a result of this, our capital adequacy ratio has improved to 10.89 per cent from 10.21 per cent. With the ploughing back of the expected profits for the current fiscal, we expect our CAR to further improve to around 11 per cent. Of the total capital of Rs 184 crore, tier-I capital stands at around Rs 141 crore.

What is the scenario as regards NPA management?

Our gross NPAs stand at around nine per cent currently, while our net NPAs are at 6.5 per cent. We plan to reduce the gross NPAs to seven per cent and net NPAs to five per cent. Our strategies for cash recovery, corporate compromise deals and upgradation have been worked out. Our current gross NPA in absolute numbers is around Rs 140 crore.

Do you plan to expand your branch network in the near future?

The fundamentals of our bank are very strong. More than 11 lakh customers support us at more than 240 branches. We may be small but we are strong. Expansion is an ongoing process. We have our own market and we will take advantage of the emerging opportunities in it.

We plan to expand to 50 branches in the next three years. For that, we have identified the top 100 banking centres across the country where we do not have branches as of now.

We need to have a presence in these centres to improve our business volumes.

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