Focus on lending to high-margin
sectors and maintain a balanced portfolio of retail and corporate loans. Additionally,
implementing competitive interest rates can help grow loan volumes, while
managing interest rate risks. By adopting innovating strategies, products &
promotional campaigns, banks can bring deposits on low cost. Significant spread
between interest income & interest cost can improve profitability. Leverage
extensive customer base to cross-sell insurance, mutual funds, and other
investment products may increase other income. The banks may focus on offering
wealth management and investment advisory services to affluent customers,
generating more fee-based income.
Streamline operations by reducing operational
redundancies & adopting technology for efficiency. By closing or merging
unprofitable branches, especially in urban areas where digital banking is
prevalent, can reduce operational costs. Automating routine tasks and focusing
on digital and advisory roles can make workforce more efficient. Negotiating
better terms with suppliers and optimizing the supply chain for branches can
reduce costs.
Strengthen credit evaluation processes and focus on
recovery mechanisms to reduce NPAs, which will improve profitability and market
perception. Streamlining the NPA resolution process and using legal avenues
such as the Insolvency and Bankruptcy Code (IBC) can help us recover stressed
assets faster.
Employees play a critical role in increasing
deposits through a combination of direct customer interaction, targeted
campaigns, and relationship building. Branch managers and relationship officers
develop personal relationships with customers, which fosters trust. By
understanding customers’ needs, they can recommend suitable deposit products
like fixed deposits or savings accounts, encouraging customers to park more
funds with the bank. Bank staff educate customers about the benefits of saving,
different types of deposit accounts, and interest rates. This often involves
conducting workshops, one-on-one consultations, or offering tailored advice,
especially for high-net-worth individuals or businesses.
Employees can cross-sell deposit products alongside
loans, credit cards, and other financial services. For instance, when a
customer takes out a loan, the employee may recommend opening a linked savings
or fixed deposit account to manage repayments, which can help in increasing
deposits. The Bank can also provide incentives for employees who meet deposit
targets. This motivates staff to actively seek new deposits by reaching out to
clients, conducting follow-up calls, and promoting deposit products.
By the help of retail lending, especially personal
and home loans, tends to have lower default rates compared to corporate loans,
strengthen MSME lending, design products suited to the needs of small
businesses, such as working capital & machinery loans, and flexible
repayment options, simplify loan applications and reduce turnaround time
through digital solutions, use Data Analytics for Targeted Lending, run
targeted campaigns, partner with major institutions, universities, and fintech
companies for co-branded loans, Increase presence and awareness in rural and
semi-urban areas etc. By the help of such initiatives banks make credit portfolio more robust,
Continue efforts to include the unbanked population
through initiatives like Jan Dhan accounts, microfinance, and other affordable
banking solutions. Introduce tailored financial products for different customer
segments such as millennials, NRIs, and small businesses. Forming alliances
with insurance providers can enhance bank’s product offerings without extensive
in-house development, helping attract a wider customer base.
Collaborate with fintech firms to improve access to
financial services, especially in rural areas, and bring innovative products in
the market. The banks have a strong rural presence, so by increasing range of suitable
products for rural areas, they can increase business base. Skilling &
upskilling of workforce are needed for overall growth of bank. Hence, training
system should be robust. Fostering a culture that prioritize customer needs can
increase loyalty, retention and lifetime value.
Ensuring transparency, accountability and ethical
decision-making increase trust & confidence among customers leading to
substantial business growth.
Demonstrating commitment to sustainability and social responsibility
will increase brand value in the market & shall also help in augmenting
business.
Efficient employee is key to success of any
organisation. Hence, attracting & retaining skilled employees in bank can
also drive growth pace exceptionally. Like
other industries, in banking industry too, product, technology, regulator’s
guidelines/instructions are changing quickly. Therefore, cope with these kinds
of challenges, banks need to be innovative & will also focus on R&D on
regular basis. Entering new regions can bring additional revenue and spread
risk across diverse market.
Enhance digital platforms to improve user
experience and increase customer acquisition in online banking, which has lower
transaction costs. Use data analytics to improve credit underwriting, predict
customer needs, and reduce NPAs by identifying risk signals early. By
implementing AI-driven solutions, chatbots, and RPA (robotic process
automation), bank can streamline routine tasks, reduce human error, and improve
efficiency in customer service and backend operations. As digital banking
grows, investing in cybersecurity to protect customer data and prevent fraud is
essential for building trust and reducing potential losses.
Reduce dependency on risky sectors by lending to
stable, high-growth industries. This lowers exposure to high-risk sectors,
helping to manage bad debt. Reducing NPAs by focusing on high-quality,
diversified loans, especially in priority sectors with growth potential, can
improve profitability. With
strong data analytics and predictive models, banks can better evaluate the
creditworthiness of borrowers & reducing the risk of NPAs. Minimizing
regulatory risk and ensuring compliance protects the bank from costly fines and
legal challenge. Being transparent with customers and investors can improve
brand trust, enhance reputation, and attract more investment.
Adopt a progressive dividend policy, under which banks
can reward dividends based on performance. Implement share buybacks when the
stock is undervalued, which increases the value per share. By transparent
communication, banks can build trust among shareholders, which help banks in
improving growth & performance. Communicate clearly with shareholders about
company performance, future and about various risks.
Shareholders should understand the company’s long-term strategy, so that they can make plan for further investment. Focus on increasing return on equity (ROE) and return on assets (ROA) to deliver higher returns to shareholders. Maintain a strong capital position to withstand economic downturns, which enhances investor confidence and helps in maintaining credit ratings too. Sell non-core investments or subsidiaries to raise capital, which can be reinvested in high-growth areas or used for rewarding shareholders.
(Satish Singh is an Ahmedabad Based Senior Columnist. Views are personal.
Mobile number-8294586892)
