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BW Businessworld

BW Real 500: Catching Up Fast

Bank of baroda is setting up processes to cut back on credit turnaround & make itself digitally future-ready

Photo Credit : Umesh Goswami


For Bank of baroda, the last few years of banking re-structuring and re-organisation has been like a blessing in disguise. It took the opportunity not only to make more than sufficient provisions, but also strode forward in re-organising business activities, making a foray into digitisation and enhancing employee capabilities. Says P. S. Jayakumar, Managing Director and CEO, “We’ve been on a process of transforming the bank on three parameters: improving the core process, digitisation and enhancing our employee capabilities.”

Last year, the bank strengthened provisions over and above required norms, which bolstered its balance sheet and enhanced capital adequacy. It pruned some of its overseas businesses, and used the one-time income for additional provisions besides internal generation in the exercise.

Jayakumar says the net effect can be seen in its robust figures. Last year, the bank reported a Rs 5,053 crore loss because of provisioning for bad loans and pensions, but that enabled a massive cleaning up of the bank’s asset books. “We have come out stronger because we sized up the issues and took appropriate steps.”
The bank continues to make further provisions to secure and fortify the balance sheet. Last quarter, for example, it had one of the highest coverage ratios among banks; it had allocated an additional Rs 1,000 crore for problems in anticipation.

The bank is now focusing on growth. Jayakumar says the bank intends to grow its loan book by 15 per cent in the next two-three years.
It is now embarking on rolling out products, improving its delivery mechanism and centralising credit-processing systems. Over 70 centralised data processing centres have been opened to speed up credit assessment so as to be able to deliver credit in no time. “We are rolling out new products, and improving the speed of the delivery mechanisms,” says Jayakumar.

Not to be left behind on the digital front, the bank has also partnered with 11 technology companies to upgrade tech solutions, creating a separate vertical to look at tech-related solutions. Alternative channels such as cards, point-of-sale machines, and other offerings are being given greater emphasis in the cashless economy. Employees are encouraged to become digital champions.

To bring more rural folks onto the digital bandwagon and increase overall digital transactions, BoB has declared 100 villages as digital, offering support to buy smartphones. “The issue with digitisation is the availability of smartphones, and we are considering financial support to buy them to load various applications,” says Mayank Mehta, Executive Director. “We would like to take the number of digital transactions, currently 60 percent, to at least 70 per cent next year,” points out Mehta.

In another processing centre at Gift City, trade-finance-related activities are being centralised and monitored under one roof, enabling early recognition of fraud. A digital war-room is monitoring the implementation of over 1,000 major and minor actions of human resources, wealth management and loan processing systems, among others.

The bank is eyeing a long-term future and trying to get back its long-term core customers. “We are looking at making the bank future ready in the next 18 months. The challenge is to be at least as good, if not better, than the rest in banking,” says Jayakumar.