Joining The Fast Line
In its 100-year-old history, bumpy roads and pot-holes have been the way for Karur Vysya Bank. Now, though, the roads have smoothened out a few years ago when the bank turned its focus on SME and retail business, reducing its emphasis on larger, troubled sectors and building up is balance sheet muscle.
The result? Karur Vysya Bank’s net profit in fiscal 2016 grew 24 per cent to Rs 568 crore, against a mere 6 per cent growth in fiscal 2015, earning it a runner-up spot as the Best Small Bank in the BW Businessworld-PwC Best Banks’ Survey, 2016.
This centenarian is dominant in the South, particularly Tamil Nadu, where gold loans, agri-credit and other retail loans are gaining traction. In the last three years, the number of its branches nearly doubled, pulling in more deposits and reducing its emphasis on retail deposits. The bank’s deposits increased 12 per cent to Rs 50,079 crore in fiscal 2016.
In a particularly challenging domestic environment last year, Karur Vysya Bank has taken the conservative route to growth focusing more on strengthening its balance sheet. As a result, its advances increased a mere 8 per cent to Rs 39,084 crore. The bank is re-jigging its banking model placing emphasis on retail and small-ticket SME loans instead of the exposing itself to stressed sectors and larger corporates. Products like gold loans form a bulk of the new business.
According to K. Venkataraman, MD & CEO, the bank’s recent efforts have already led to substantial improvements in the financial position. A move by the bank in its recovery mechanism, which has been strengthened at all levels, is reflected in its balance sheet. Gross NPAs shrank from 1.85 per cent to 1.3 per cent, and net NPA dropped from 0.78 per cent to 0.55 per cent in FY16 and came at Rs 511 crore.
