IDFC Bank targets 15 million customers in five years

IDFC Bank targets 15 million customers in five years

New private sector lender IDFC Bank will flag off its operations on October 1, with 23 branches for corporate and rural customers. Starting with a predominant share of corporate banking business, IDFC's banking subsidiary expects to grow the business of Bharat banking, a rural banking unit, to Rs 15,000 crore in five years.

Its personal and business banking unit focusing on retail, small and medium enterprises (SMEs) and self-employed professionals, will start operations, in January 2016. Rajiv Lall, the bank's executive vice-chairman and managing director, said the aim is to grow the client base from the current 400 corporate customers to 15 million in the next five years, a bulk of whom will come from business and personal banking and Bharat banking. Bandhan Bank, which got a banking licence around the same time as IDFC, started operations in August.

IDFC Bank is aiming at 10-15 per cent net profit growth and will rely on technology for customer acquisition rather than open branches across India. IDFC Ltd posted a net profit of Rs 240.88 crore for the June quarter this year.

Lall said the economy was coming out of a very difficult period after the global financial crisis and amid stress on bank balance sheets. Over the last year, the economic environment in India has seen steady improvement and the bank would like to gain from this momentum.

The bank will have a balance sheet of Rs 75,000-80,000 crore initially. Out of this the loan book, mostly infrastructure advances, will be in the region of Rs 55,000 crore and the balance will comprise bonds, corporate bonds and investments. It will be compliant with the statutory liquidity ratio and cash reserve ratio norms from day one, he added.

Commercial and wholesale banking, headed by Ajay Mahajan, will have an overbearing share in the loan book as well as bottom-line contribution. "We were offering term loans till date as infra lender. Now as a bank, we will be in position to give working capital, guarantees and letters of credit. Five years down the line, the bank expects the corporate segment to have two-thirds share in the loan book," Lall said.

The business will have three clusters - corporate, treasury services and government business. It expects the government business to ensure a steady flow of fee income and float money.

Bharat banking, backed by strong technology as well as brick and mortar banking, will start with 15 branches in Madhya Pradesh. Though this is a thrust area, its share in loan book is expected to be small. The emphasis would be on reaching the maximum number of customers with less investment on physical infrastructure.

Personal and business banking will be the last to start operations as the bank will first like to fine-tune its technical and service backbone. This business will start from January 2016 and would aggressively reach out to self-employed middle class professionals like architects, wedding planners and caterers. They generally create the maximum job opportunities, Lall said.

Lall said feedback surveys done by the bank in the run-up to the launch showed "no one likes bankers as there is a widespread perception that bankers are product pushers and less of solution providers". This is where IDFC Bank will like to stand out in services and offering, Lall said.

Source :Business Standard.