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The Indian banking industry consists of 27 public sector banks, 21 private sector banks, 49 foreign banks, 56 regional rural banks, 1,562 urban cooperative banks and 94,384 rural cooperative banks, in addition to cooperative credit institutions. Rising incomes are expected to enhance the need for banking services in rural areas and therefore drive the growth of the sector. As recently as September 2018, Department of Financial Services (DFS), Ministry of Finance and National Informatics Centre (NIC) launched Jan Dhan Darshak, a mobile app to help people locate financial services in India. Debit cards are radically replacing credit cards as preferred payment mode, especially after demonetization. Indian banks are increasingly focusing on adopting integrated approach for financial inclusion initiative, risk management and constant updating with technological revolution in the industry .
We spoke at length with Mr. Vijay Saxena, AGM-Marketing (Madhya Pradesh), Central Bank of India, where he shared his views on the future of banking industry in India, its challenges and future expectations and growth parameters.
Q: How large is Madhya Pradesh banking market in India?
Banking services in the State are covered through a network of 7,426 branches as on 30.6.2018. Besides brick and mortar branches, banking facilities are being extended by 10,343 business correspondents in 11,864 Sub Service Areas.
At the end of June 30 2018, there were 42 Commercial Banks (CBs), 3 Regional Rural Banks (RRBs), 1 State Cooperative Bank (MPStCB), 38 District Central Cooperative Banks (DCCBs) and 7 Small Finance Banks (SFBs), Payment Banks viz. FINO and IPPB are also functioning in the state.
In Madhya Pradesh, each bank office serves 10,209 people compared to the all-India average of 9280 people.
However, as per the Sub Service Areas, banking facilities are being provided by bank branch and business correspondents within the radius of 5 Km from each village. Public sector banks constitute 57% of the banking network in Madhya Pradesh followed by Regional Rural Banks (18%), Private Sector Banks (12%), Cooperative Banks (11%) and others (2%).
As of June 2018, total number of ATMS in the state increased to 9621 from 9316 a year ago.
Q: How many branches of Central Bank of India are operational ?
Central Bank of India has 465 branches as on date.
Q: While expansion is ongoing process, is there any focus on Urban or Rural sectors?
Out of total 7426 branches, 2740 (37%), 2336 (37%) and 2350 (32%) branches are in rural, semi urban & urban areas respectively. Net y-o-y increase of 167 branches registered during June 2018.
Q: Given the presence of so many other banks, how does Central Bank of India stand different with specific reference to M.P. region?
Central bank of India is the SLBC (State Level Bankers Committee) Convenor bank in the state, which makes it different from other banks. In addition to this, CBoI is the third largest bank in the state in terms of branches and business after SBI and DCCBs (District Central Cooperative Banks). Central bank of India has been pioneer in the implementation of Government Sponsored programmes.
Q: In this age of digital mediums, do you think, Central Bank of India has been able to keep up with technological advancements and offers digital-based services to its customers?
Yes, the digital products and services of CBoI are at par with the other peer banks/ industry.
Q: There have come to fore a lot of concerns from banking industry, because of first demonetization and then NPAs. How did demonetization affect Central Bank of India? Also, how is M.P. region’s record on NPAs?
Due to Demonetization, excess deposits accrued to the banking industry, which helped banks to reduce their high-cost deposits and boosting CASA (Current Account and savings Account).The impact of Demonetization in NPA was minimal.
Q: What are the talent development and training activities within your organization?
Training in CBoI is provided through Officers Training Colleges, Zonal Staff Training Centres, CBoI has CBOTC (Central Bank Officers Training College) and ZSTC (Zonal Staff Training Centre) in Bhopal.
Q: From an industry’s point of view, what are some of the challenges that banking industry faces?
Rising NPAs is cause of concern for the banks. NPA ratio of the banks in Madhya Pradesh rose from 7.89% of total credit in June 2017 to 13.36 % by June 2018. In absolute term, NPA increased from 18,773 crore in previous year to 36,503 crore during June 2018, showing 94% increase y-o-y.
We also see low credit absorption capacity in remote & tribal districts viz. Shahdol, Mandla, Dindori, Umaria, Anuppur districts etc.
Q: What’s in store for MP and Chhattisgarh Markets for next two years from Central Bank of India?
There is a vast scope in financing the agriculture investment credit in the state. MSMEs sectors are growing and there is a vast opportunity in financing these sectors in both the states. CBoI looks forward to be of assistance in the same.