Oriental Bank of Commerce aims at up its current account-savings account portfolio (CASA) from the present 27% to 30% by the end of this year.
May look at a credit card foray, too
MUMBAI: Oriental Bank of Commerce aims at up its current account-savings account portfolio (CASA) from the present 27% to 30% by the end of this year.
To achieve the 300 basis points gain, the company is running a CASA campaign in the rural areas.
“So, far we’ve managed to acquire 600,000 savings accounts and around 15,000 current accounts from remote areas,” said Allan Pereira, executive director with Oriental Bank of Commerce.
Currently, OBC is focused on the rural and semi-urban parts of the country.
“We are also looking at adding another 85 branches by March 2008 to the current network of 1,273 branches. These branches will be spread across the rural areas of the country,” said Pereira.
Banks are building their CASA business because it is the source of cheapest deposits available anywhere.
While current accounts carry no interest, savings account cost just 3.5% per annum. With interest rates likely to decline, banks holding high-cost deposits need to bring their cost of funds down.
Kshitiz C Prasad and Chirag Bhimajiani, analysts with Anandrathi Financial Services, said the proportion of CASA should go up since banks have now started reducing their interest rates on deposits, in a note to clients on December 21.
On the personal finance side, Pereira said the bank may consider entering the credit card business.
“But nothing is finalised on that front yet,” he said.
Meanwhile, OBC is also aggressively growing its fee-based income, which contributed about half of its non-interest income.
Through its recent alliance with IDBI Capital Markets, the bank will offer share trading facility at around 100 branches this year, Pereira said.
“IT initiatives have been beefed up. Around 99% of our total business is through core banking solution now,” he said. The bank also has a tie-up with Life Insurance Corporation of India (LIC) to sell its insurance products.
“This brings in around Rs 10-15 crore annually,” Pereira said.
OBC is foraying into the insurance sector partnering Canara Bank and HSBC Insurance (Asia-Pacific) Holdings Ltd. Operations should commence in the second-half of 2008.
“We have filed for an R1 licence with Insurance Regulatory and Development Authority,” Pereira said.
Prasad and Bhimajiani of Anandrathi expect OBC to notch up a compounded annual growth rate of 33% from FY08 to FY10 as they expect it to sell more third-party products.
mahalakshmi@dnaindia.net
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