Here’s @sahil_vi 's conversation with VV in the last earnings call:
Sahil Sharma:
My first question is to understand our CASA strategy. If you look at our CASA book its growth
has been slightly lower than our loan book growth in Q4 and also FY22. The liability franchised
the backbone of any modern retail bank. So, what I am wondering is what is our strategy on the
CASA side and whether it is possible first to improve our CASA ratio even from here, beyond
50%. Related to that I think what you have mentioned is that current accounts are fiscal….?
V. Vaidyanathan:
Hold on, let’s take one question at a time, it will make our life easier. The CASA is easy one to
handle actually. See, last year we were running LCR of 150%. So, that’s a lot of money, excess
lying either with RBI or a repo or somewhere. So, our reverse repo also, we were not getting
enough returns. This year onwards, we want to pay the loan book, we will press the accelerator
on deposits, we will get it. We really don’t see any concerns. I mentioned in my opening remarks,
how we raised about 25,000 crores, even in a COVID year. I’m telling you maybe there are
concerns about our bank that you might have had about our profits and all, the past but I hope
you’ll agree with me that our bank really is a respected brand. We get deposits, huge deposits
from retail, not the bulk deposits kinds and when we just want to press the peddle on the
liabilities, it just comes pouring in.
Sahil Sharma:
Can we expect it to grow roughly at the rate of the loan book so that the CASA ratio is
maintained, roughly?
V. Vaidyanathan:
Yes, we will go a little bit fast. We think that 50 is no problem for us to maintain.
Sahil Sharma:
Related to that my question was, I think our current accounts are around 15% to 18% of CASA right now and I wanted to understand what kind of initiatives you have taken to grow your
current account book and whether there is an opportunity to cross sell our current accounts to
our MSME retail borrowers?
V. Vaidyanathan:
Great question. It’s a good observation also that our current account is as a proportion of CASA
so to say is not good enough and we need to improve on that. For us savings account pressing
the button on savings account is easy one, we just pressed it and we got it but we will start
working on current account a little more because that requires as you know, as we build this this
even in a previous organization, but it takes time to build it because you need to build good
technology, good ecosystems, capture that flow of money from end-to-end, from business-tobusiness, then didn’t give ads, multiple solutions to customers which are not just banking related.
It could be accounting solutions and HR solutions, legal solutions, we got to build all those
capabilities. We’re building this up right now and we are quite confident that we will make a
mark in that space also.
Sudhanshu Jain:
Just to add, the proportion of CA in the overall CASA has improved from 11% to 18% and our
endeavor would be to take it to 30% in due course, like other good banks.
Sahil Sharma:
We had launched an amazing credit card product and the rate of interest here is sort of dependent
on the customer credit profile. I think the idea here was that it might encourage some of our
customer base to revolve credit for one that are comfortable revolving credit. Have you seen that actually pick up and can you share any kind of data on what percentage of our credit card
customer be who are actually revolving their credit and how this compares to industry?
V. Vaidyanathan:
By the way, there’s a lot of disturbance on your line. If you don’t mind keep it on mute mode,
it’ll help others. On the credit card front, typically in the business takes time to start getting about
a 50% of the loan, of the book to start having interest income. Typically, you can think of it like
about 25% of the book could be revolver, about 25% of the outstandings could be installment
based where the customer is not revolving but customer is choosing to convert the transaction to
an installment and balance 50% of straight forward transactors they just pay up on time. We
would say, we are a little behind the industry at this point of time because we are still a newer
player, we are just 1 year into the business. But as this plays out for the next 1 or 2 years, we
will definitely get better. But good thing about our bank is that our customer complaints are
really very low. By the way, we are a new bank. It’s not that people knew our credit cards
compared to other banks who have 15-20 million cards each, maybe 15 million and we just have
maybe 6,00,000-7,00,000 today. So, despite being a new player the spends on our cards is really
good and delinquency is very low on this business for us. All this is coming because right in the
beginning when we launched the card, we didn’t try to gain the customer, figuring out if we price
it like this, I’ll make more money, less money. We straight forward made really good product
for the customer. We didn’t say that if you spend so much, I will waive your fees. If you do that,
we straight away set it free for life or no annual fee. We straight away paid good reward points,
we straight away said that reward point can be redeemed for the next purchase; something that
really nobody does in our knowledge. Everybody wants to give some catalog against it. Though
we are planning to introduce a fee structure for redemption of the reward point but I guess it’ll
be nominal. Customers will have already been notified. Basically, we have put a really simple
product and a really customer friendly product. I think it will pay back in due course, maybe a
little slow but we’ll pay back very well and pay back in a sustainable manner to us.
