New Delhi : Old-generation private sector lender Lakshmi Vilas Bank (LVB), which used to have a low Casa base for long, has turned around the deposit-elephant of late, thanks to separation of the credit function from branches and making them focus on deposit mop-up. Its consistent drive to ramp up deposits has led to a 6 percentage points spike in low-cost Casa (current account/savings account) deposits in the September quarter to 19.34 per cent which as a percentage of total deposits rose to 20.97 per cent from 17.3 a year ago.
For the quarter, Casa grew by 32.5 per cent, helping the bank improve its cost-to-income ratio to 48.27 per cent from 51.44 per cent. And the management of the bank, which is also planning to raise Rs 800 crore through a rights issue next month, is sure to retain Casa at 20 per cent level consistently this year and take it further to 25 per cent over next two years. Traditionally, LVB’s Casa was hovering at 13-14 per cent. The Casa turnaround began when the 91-year-old lender centralised its credit function some years back and created special credit centres and made branch managers to focus mainly on deposits. Today none of its 510 branches do lending.
“Too much time of the branch management goes in credit and recovery matters, leaving them with little time to focus on the Casa and fees business,” LVB chief executive P Mukherjee says. “So, we decided to end this practice and took away the lending part from him. Now we’ve a centralised credit centre in Chennai for corporate loans and 11 loan centres for SMEs across key geographies. For retail we have a centre in Chennai and one in Bengaluru,” he told PTI here over the weekend. Earlier this month, LVB reported a whopping 83 per cent plunge in net income at Rs 10.50 crore as its provisions for bad loans jumped three times to Rs 187.4 crore.
