Utkarsh Micro Finance Ltd, which got the RBI’s approval to set up a small finance bank on Monday, will offer higher savings rates from January 14, 2017, to attract customers and set up their deposit base.
Govind Singh, managing director and chief executive officer of the Varanasi-based firm, said, “The savings rate on offer will be 1-1.25% more than other banks. We want to focus more on retail deposits with a tenure of 6 months to 1 year. We will also offer higher deposit rates for 2-3 years as well.”
Apart from Utkarsh, of the ten entities, Equitas, Suryoday, Capital Small Finance Bank, ESAF, Ujjivan Financial Services Ltd have got the RBI’s final approval.
At present, fixed deposit rates at banks are around 7-8%, while saving deposit rates are around 4%.
However, the note bank has forced the bank to cut its growth target by about 10%. “Anyway, we will go ahead with our launch plan for January 14 next year. We expect our growth target to be reduced. Our book (order) may grow to ₹2,000 crore (from current ₹1,800 crore). Our target was ₹2,200 crore by March-end,” said Singh. He further said instead of attracting 14 lakh customers, they will now aim to get 13 lakh by March 2017.
Singh said, the note ban would, however, help reduce interest rates, which would cut banks’ costs and create more digital space for our 12.2 lakh customers.
Present in select cities across 10 states in north India, Utkarsh plans to expand in 4-5 new cities by April next year. “We will expand from our core geographies and take it forward from there. We will want to expand in cities like Lucknow, Kanpur, Bhopal, Indore, etc…
“We plan to convert about 10 of our existing MFI branches into bank branches and add 10 new branches along with 20 ATMs by January. Our aim is to reach 150 ATMs by April and 450 branches by September,” Singh added.
The bank will also expand its banking services to home loans, small and medium enterprise loans and insurance products. He said the focus will be on loans up to Rs 25 lakh in the next 12-18 months and then scale it up. They have done pilots by offering home loans in 3 cities.
Singh is also focusing on training his employees to build a culture and service based bank. “We have recruited retired public sector bank officials to train our employees. We have hired about 300 senior and mid-level executives and now go on to hire more “feet on the street” (field officers). We will add more 1000-1200 employees by April.”
It will also tie-up with 3-4 public sector banks for cash management and private banks for content management system (CMS). RBL Bank already has a 10% stake in Utkarsh Micro Finance.