IDBI Bank rejigs ops in line with private lenders – Times of India

MUMBAI: IDBI Bank, which was categorised as a private sector lender in January 2019, has restructured most of its operations and brought them in line with non-PSU lenders. The bank has revised internal structures and risk policies based on recommendations from management consultants McKinsey and is now future-ready, according to Suresh Khatanhar, deputy managing director director, IDBI Bank.
“The pandemic helped us to pause and deep dive into existing processes and products and see what improvements are necessary,” said Khatanhar. He added that as it was a lean period, it used the time to refine processes, come out with risk-mitigated products and work on a digital initiative to get future-ready.
The bank has put in place a performance-linked incentive structure that includes employee stock options. Except for the junior three grades, bank officers are outside the Indian Banks’ Association salary framework followed by public sector banks. IDBI Bank was classified as a private lender after Life Insurance Corporation acquired 51% share from the government, which has decided that IDBI Bank would be eventually sold to strategic investors.
“We did three things. We revisited all products and policies for the risk-management framework. Then, we decided, based on our capital, what could be the maximum exposure for various rating-based exposures to avoid concentration risk. Third, we did vertical reorganisation,” said Khatanhar. The bank decided to have separate verticals for personal banking, priority sector and collection & recovery. This shift from the earlier branch banking model will help the bank scale up faster. “The process is now complete and the new structure is up and running. On the risk front, we have put various advanced features like early warning reports. We have integrated our treasury management and an enterprise data warehouse has been put in place. A separate team is handing business analytics and artificial intelligence,” he said.
Consumers are already getting to experience digital initiatives through WhatsApp banking and video KYC. Borrowers are getting straight-through experience with loans being credited into their accounts through RTGS upon sanction. Khatanhar said that the bank’s systems are now ‘API- ready’, which meant that it could onboard any fintech seamlessly if it was required to improve efficiency. Like in other large private lenders, IDBI Bank has put in place a customer relationship management module and currently all high net-worth customers are referred to a relationship manager. In recent years, the bank has transformed from a corporate lender to a retail one as the bank was placed under the RBI’s prompt corrective action framework. This resulted in the ratio of retail to corporate improving to 63:37. In future, this will decline as the lending restrictions have been lifted and the bank can now advance corporate loans.
Khatanhar said that the bank’s share of low-cost current and savings account deposits now stand at 55%, which is among the highest.