If I were a PSB CEO

 

If I were a CEO of a PSB today

“If wishes were horses beggars would ride” - Scottish Proverb

The most unenviable job to-day is to be a CEO of a PSB. Pandemic is unrelenting. While the medical fraternity takes care of the health needs, satisfying the financial requirements fall on the bankers.  And PSBs are the arm of the government in its efforts to ensure least inconvenience to public in their day to day life and also keep the economy, walking at least. The author’s wishes go like this.

Vision & Mission: Vision is long term and Mission is short term. So keep the vision in the back of the mind and concentrate on the mission.More of a defence to sustain in the short term and maintain a bit of aggression in safe waters to keep the long term torch alive.  Live for the day and focus on current month, quarter and year in that order.

Focus Areas: 

-staff safety & welfare, ensure they remain determined and do not enter depression cycles

-grow the deposit book to maintain liquidity

-Stress Assets - monitor disbursals in new /additional loans, review progress in SMA portfolio, set in motion OTS both in suit filed and to be filed

-Sanction in retail: make necessary changes in review scoring model methodology in retail segment to ensure loan sanctions are based on ‘almost certain’ cash inflows.

- implement social objective directions of the government for sanction/restructure of loans with due validation on the assumptions for inflows, viability and repayment.

-look for not tapped fully segments – example – expanding agriculture, health

-investment strategy that reflects realistic price of investment post COVID scenario

-invoke resolution plan on all eligible borrowers to get breathing time for provisions but implement only viable ones before last date of implementation

While the above is the abstract, I detail below some specific strategies in the following areas:

Staff welfare:

ü  Protect Staff: Two doses of Vaccination, tie up for cashless treatment in time, encourage staff to report sick without hesitation, have arrangements for COVID testing once a month/quarter depending on severity of pandemic in the area. Constantly talk to staff recovered from COVID personally and remain in touch with the families of staff who lost their lives as frontline warriors. 

ü  Decide on staff rotation, 50% attendance, etc. based on local area conditions

ü   Minimum transfer exercise with least disturbance to staff and branch but keeping vigilance directions in mind

ü  Promotion - even out of turn/reducing eligible period- should be the norm to sustain the motivation level

BRANCH/ALTERNATE CHANNELS TRANSACTIONS

·        Empathise with customer daily needs. Keep Cheque Drop Box, Pass Book Priniting Machines near the entrance.

·        Introduce/increase reward points for operating through alternate channels including ATM. No fees will be levied on withdrawal thro bank's ATMs by bank's customers. 

·        TV Monitors at Entrance displaying demo on how to operate alternate channels for carrying out transactions. Desk Top near the TV Monitor with menu to select the menu for a particular alternate channel.

·        Prominent flaxi board display that ATM inside/outside the branch can be used for cash transactions upto Rs.10,000.

·        Popularise ATMs among senior citizens especially pensioners.  Keep a floor co-ordinator outside the counter in the first week of every month.

·        Business Continuity Plan to be ready and a notice should be displayed as to the branch that should be approached, in case the branch is to be shut down temporarily for COVID.

·        New Customers for opening accounts/deposits/loans to be handled with direct feeding into the system and devise simple applications for filling up. Collect documents with a check list and convey sanction of loans on the spot. The check list may be displayed. Website/bank apps to facilitate online application and submission of documents for sanction of loans

Liability Products:

o   Grow the book – Through online and in the branch. Provide the list of customers added online to the branches concerned.

o   Interest rates on deposits are at historic low both SB and Fixed Deposits. It is sure to go up after 6-9months maximum. Show your empathy by offering 10/15 bps more on SB for balance up to Rs. 1 lac and 25 bps in select buckets on fixed deposits. Senior citizens may be offered 10 bps over the higher interest rate available for them. Do it on a campaign mode.

Loans and Advances: 

Quality of Assets: Keep Portfolio intact and immune with small bruises

§  Focus should be on maintaining quality. Make use of all concessions announced by the government/regulator in extending moratorium, restructure eligible loans, etc. Invoke restructuring option with borrowers whose accounts show promise of positive results due to course corrections. In respect of ineligible borrowers, please do not close the door. Look at permissible rescheduling of interest/instalment for standard assets, sanction of fresh facilities, etc. to retrieve the accounts. If the viability is assured, irrespective of downgrading issues, implement restructuring.

§  In many cases, viability might depend on how pandemic plays out in the near future. In such cases, invoke the restructuring option in the last week before due date so that the status of asset is retained till last date for implementation. Please do not account for interest accrued in such accounts till implementation.

§  Implement restructuring in those cases where viability chances are at least 50%.

§  In respect of others, authorities one level above BMs can be given the discretion for OTS with hair-cuts ceilings clearly defined.

§  Have monitoring, follow up mechanism in place in administrative offices to ensure that the implemented restructuring do not throw surprises later on.

Sanction: 

Agriculture: Even today more than 75% of the portfolio does not show any signs of stress. There will be umpteen numbers of accounts which show a record of regular repayment and renewals. Explore increasing the loan amounts in such cases up to Rs.3 lacs as interest subvention up to 5% is available. Try to extend Agri. gold loans in respect of those who availed up to scale of finance. Hundreds of crop loan borrowers might be pursuing allied activities like goat farming, dairy, etc. Explore.

MSMEs: Take additional exposure in respect of existing borrowers depending on merits and the cardinal principle is probability of assured cash inflows. Be selective in new ones, keeping in mind the uncertainty arising out of pandemic in that industry.

Personal Loans: Salaried segment to be preferred and in respect of business segment, prefer those in business for more than 5 years. Ensure certainty of cash flows in respect of unsecured which are backed by check off or SIs.

Gold Loans: Extend liberally. Use it for closing other dues as well. Prepare a simple cash flow for next 1/3 years to have a realistic repayment programme. Suggest EMI where regular income is available. Build safeguards against internal/valuer frauds.

Corporates: PSEs/corporate with AA and above rating to be targeted for new/enhancements. In respect of non-fund based limit, even in respect of existing ones, open the new LC/BG with cash flow drawn for the entire period for which the facility is opened.

Investments:

Yields in secondary market is artificially low. Prime issues might face MTM related depreciation later on. Treasury and Cash Management Bills, short term CPs and more than 10 year dated securities depending on yields may be preferred.

Insurance/Mutual Funds:

Concentrate on deposit customers. Canvass health and life insurance products. Liquid MFs and SIP products can be given importance. Growth oriented MF products to be canvassed strictly as per customer risk appetite and profile. 

Finally, what I have written may appear to be of no relevance or basic/rudimentary in nature. If you feel that way, please read the Scottish proverb given in the beginning and treat this as a wish list accordingly.

V.Viswanathan

4^th July 2021