Four-in-one investment option for NRIs

IDBI Bank Ltd revives population's traditional saving habits

IDBI Bank Ltd offers personalised banking and financial solutions to its clients in the retail and corporate banking sphere through its large network of branches and ATMs spread across India. It also operates an overseas branch at the Dubai International Financial Centre (DIFC) and plans to open representative offices in other parts of the globe.
Excerpts from an interview with
S K V Srinivasan, Executive Director of the bank:
How do you view the banking scenario in India for the remaining three quarters?
The outlook for the banking sector is broadly favourable, as credit and deposit growth rates are expected to pick up. With various policy reforms and improved growth outlook, consumption and investment demand is likely to surge, which will fuel demand for bank credit.
Furthermore, banks have recently lowered their base rates translating into lower lending rates, which may stimulate credit demand. These will have a multiplier effect on further catalysing demand and thereby drive growth in bank credit.
India has traditionally been characterised by a high saving rate, but there has been a dip in deposit rates in the past couple of years. This is due to high inflation rates, which not only rendered the real interest rate in the negative region, but also impinged upon people's disposable income.
With relatively lower inflation rate, real interest rate is positive and disposable income among people has risen. Positive real interest rate is also bringing back savings into financial assets. This is expected to contribute towards fuelling growth in deposits in the coming months.
Healthy monsoon in July and the imminent consensus in passage of GST bill would ensure GDP growth of about 7 to 8 per cent in the current financial year. Banks are also taking appropriate corrective measures to address issues related to asset quality.
Do you expect interest rates to soften over the coming months?
The Consumer Price Index (CPI) inflation rate, while rising in recent months, is expected to remain within the target of 6 per cent set by the Reserve Bank of India (RBI). So far in the calendar year (till the end of July), the RBI has cut the key policy rate, the repo, by 75 basis points to 7.25 per cent. In tandem with the reduction in policy rate, many banks have also lowered their base rates, which have effectively brought down the lending rates in the economy.
If the CPI inflation follows its targeted trajectory, the RBI will have further room for rate cuts, which may serve to further lower interest rates in the economy. The RBI will continue to base its policy stance on the movement of CPI inflation rate and the upside risks to its trajectory. It will further announce rate cuts if the outlook for CPI inflation is favourable. Other factors that could prompt rate cut include fragile recovery of the economic activity, and difficulty in effecting rate cut when the US Federal Reserve starts increasing rates. This could see outflow from the Indian bond market due to arbitrage opportunities.
Will technology play a major role in the Indian banking sector in the future, especially with the proliferation of smartphones in the country?
Smartphones have become ubiquitous due to a flurry of affordable sets in the Indian market and is set to increase in the coming years. This has been coupled with a rising number of mobile Internet users. Banks now recognise mobile banking as one of the key factors that not only allow them to increase customer convenience, but also helps them to offer a personalised customer experience when using the mobile banking applications.
Thus, there has been a distinct shift away from traditional channels such as branches and ATMs. We are moving towards alternate channels of delivery such as Internet banking, mobile banking, tab banking, etc. The cost of digital channel is less than a tenth of physical channel cost. Scalability is also very high. Mobile banking applications present unlimited opportunities as it offers customers the convenience of carrying out banking transactions in a hassle-free manner.
The scope of mobile banking applications now extends beyond vanilla applications such as viewing account and transaction details. They recommend product suggestions that will enhance a customer's overall financial well-being.
The scope of such apps is expanding, encouraged by increased functionality. This transformation has taken place because of mobile technology revolution, and increased customer awareness and desire for carrying out transactions through digital channels. In line with the trend, we would be launching mobile wallet, social media banking, cardless cash withdrawal, tab banking and multichannel IMPS to enhance the customer experience with us.
Are Indian banks investing substantial amounts to strengthen their technology infrastructure?
Indian banks are increasingly transforming their businesses by leveraging technology-intensive solutions to increase their revenue, enhance customer experience, optimise cost structure and manage enterprise risk. However, there is a wide variation in the technology agendas and implementation capability across different players of the banking industry. Thus, most of the banks, while continuing to upgrade and strengthen their existing infrastructure, are also investing in new areas to cater to the growing need of their stakeholders. The initial cost of setting up the system is always high and the time taken for initial rollout is longer, as it is necessary to ensure that transactions are 100 per cent safe. But once done, the incremental cost per add-on customer is
Does this prove beneficial to global NRI customers as well?
The increased digitisation of banking transactions has enabled customers to carry out their transactions at their convenience at any time, any place. This has especially benefited NRI customers for whom it may not always be possible to visit a branch for conducting transactions.
What are your upcoming plans to cater to the needs of NRIs?
Apart from DIFC, where we have a branch, we are engaging with the regulator for more offshore presence. We offer a range of NRI services with high interest rates and superior exchange rates. Our global network of correspondent banks and wide range of remittance options empower NRIs to remit money from anywhere.
Our robust technology platform ensures rich customer experience, while executing seamless end-to-end transactions. We have a dedicated relationship manager for NRIs as well as quick and convenient customised home loan solutions. We offer four-in-one investment account for NRIs (Demat, Savings, PIS and Trading account) - a tie-up with our subsidiary IDBI Capital Market Services. We bring the best in life and general insurance solutions in partnership with IDBI Federal and Bajaj Alliance.

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