Most of the restructuring is done: South Indian Bank MD

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Murali Ramakrishan, who was formerly with ICICI Bank as senior general manager was brought in as MD & CEO by the board in October 2020 to turn around the 93-year old Thrissur-headquartered South Indian Bank. In an interview with TOI, Ramakrishan speaks of his plans.
You joined the bank amid the pandemic. Was there any specific mandate for you as CEO?
The discussion was more on how I see the bank and how it can be run differently and solutions for various issues. SIB is the largest among the small banks and it has a branch-centric structure like that of a public sector bank. It was a great experience to articulate how you want to restructure the entire bank in terms of both the asset side and liability side and put in the various pieces so that it comes together as a solid foundation.
To what extent has the restructuring been accomplished?
I would say that it’s almost done now. Earlier the branch managers were firefighting everything happening in the branch and so they did not have much time for business. Today the role is split between a branch manager who looks after the business and goes after customers and an operations manager responsible for operations. The branch distribution structure focuses primarily on deposits and some businesses that are run through branches like agri and gold loans. We have separate business verticals with a clear focus on what they need to deliver and their focus is not just credit but how much cross-sell they can do. Besides this, I brought in the data science division for analytics on the 68 lakh customer base so we can churn the existing book to come up with pre-approved offers. We have a chief marketing officer and chief credit officer and we have eliminated them.
Experts say that bank IT systems need to undergo a revamp for the digital world
For the last four years, this bank has invested Rs 150-Rs 180 crores in technology. We have gone for a new retail platform from Nucleus. We are also going for a new SME platform for onboarding all SME customers. We have new systems for collection, treasury, and customer relationship management. There is a clearly articulated strategy for cloud adoption which we have taken to our board., The two main issues are that there should not be any compromise in customer secrecy and there should not be any vulnerability to outside attacks.
One of the issues with the bank is asset quality. How is that being addressed?
To improve asset quality we have completely revamped collection and recovery. For retail loans, we have gone in for outsourcing as is being done by the big banks. For SME and corporate customers, recovery is being done by employees. In fY22 we had around Rs 850 crore of upgrades and recovery up to December 2021. We are expecting Rs 1200 crore of upgrades by March 2022. We have also sold loans to asset reconstruction companies and I am monitoring special mention accounts every week. My goal is to first bring net non-performing assets down to less than 2% and then below 1%. We have surplus funds right now which enables us to pitch for AAA and AA companies for short-term loans.
Given your growth plans, how soon would you need to raise capital?
I am not desperately looking for capital as the bank’s capital adequacy is about 15.7%. unless we see the market providing a huge opportunity to go full-on advances growth, then probably we will go for more capital. I have already taken approval from the board to raise about Rs 2000 crores of equity. And as a first step, I am looking at raising about Rs 500 crore. But I will time it appropriately because today given the fact that a lot of short-term money is going to IPOs, our story will have to be a little more convincing for people to take a medium-term outlook. So I will go and target institutional investors who have a medium-term horizon. I would be happy to do that in the next three to six months.



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