CUB’s growth mantra remains ‘small is beautiful’

Staying away from lending to corporate sectors and focusing on SMEs instead has helped in sustaining profits, says N Kamakodi, who spearheads the Kumbakonam-based bank
CUB’s growth mantra remains ‘small is beautiful’


Small and medium enterprises are the mainstay for City Union Bank (CUB), which has managed to post 8 per cent net profit in Q3. While discussions veer around large corporate borrowings, defaulters and economic slowdown impacting businesses hard, CUB is unfazed.

N Kamakodi, MD-CEO, CUB is clear as he spells out the bank’s strategy to remain focused on SMEs. Speaking to DT Next, he said the gross non-performing assets (NPAs) in the industry peaked at about 12-13 per cent. Now, it has reduced to 6-7 per cent. “One of the main reasons for the increase in the gross NPAs for the banking sector – a lot of issues in the consortium lending, particularly both on corporate and infrastructure resulting in problems concerning project completion,” said Kamakodi.

“Right from the beginning, CUB decided that those exposures were well beyond its control. We did not face too many problems as we stayed away from the larger sectors. That helped us get lower incremental provisions that needed to be made,” he said. The top executive added other banks that chose to also stay away from these sectors were doing relatively better. “We do not want to branch out to the big corporate sectors anytime in future. MSMEs will continue to be our bread and butter,” added Kamakodi.

Elaborating on the segments that the bank considers to be its stronghold, the leader said, “SMEs, commercial trading and agriculture account for three fourths of our portfolio. We are not strong in lending towards consumption and our decision to play to our strengths has helped us fare better.” He also added that even with the slowdown, there has not been any major change in lending patterns over the last couple of years.

Non-CUB users can nowask ‘Lakshmi’ for help

CUB also relaunched its ‘All-in-one’ app after upgrading its features and making it accessible to even non-account holders of the bank. The app uses voice activation to complete transactions in seconds its AI bot Lakshmi. Users can also check their account balance, the details of their last few transactions by “asking Lakshmi”. The bot will then generate an OTP which can be read out loud for the app to register and declare the account status.

Speaking about it, Kamakodi said, “We are possibly the only bank in the world to offer such a service. After its launch last November, we came across a lot of glitches, so we fine-tuned it and have now made it accessible to even non-customers.” Non-CUB users can use the app to explore options of different accounts and the ease with which they can carry out their transactions with the upgraded app.

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