Catholic Syrian Bank to reengineer its business processes
Venkatachari Jagannathan
15 September 2006

Chennai: Thrissur-based The Catholic Syrian Bank Limited (CSB) is in the midst of planning a total reengineering of several of its business processes to reduce the time its customers spend in transacting business through the bank.

Says N R Achan, chairman of the bank, "The business process reengineering (BPR) exercise will increase our manpower utilisation and attain better operational capabilities."

Apart from reducing the time spent by a customer at the branch, the BPR is targetted at cutting the loan processing time from around 71 days that it currently takes to process large trade, business and industrial loans. Even retail loans take around a fortnight to process.

"With the implementation of BPR the processing time for large industrial or business loans is expected to come down to 20 to 30 days and five days for retail loans," says N Sivaprasad, consultant, Pragna Consultants Pvt Ltd, Chennai, the bank's BPR consultants.

The bank will also centralise its retail loan processing and other routine activity at four - five back office centres. "We expect increased volume at reduced cost," says K R Rajagopalan, assistant general manager (BPR).

What is interesting is that the BPR activity will go hand in hand with the development of end-to-end core banking solution. The bank has joined hands with Laser Soft Infosystems Limited for development of core banking solution.

Says B Suresh Kamath, managing director, Laser Soft, "The core banking solution would be designed to implement back office processing centres as required by the bank and incorporate all BPR requirements." The browser-based core banking solution is jointly being developed on a J2EE platform.

At a time when many other banks spend around Rs1 crore per branch for implementing core-banking solution, the 345-retail outlet (320 branches, 25 extension counters) bank has spent for its solution an average of Rs11 lakh per branch.

"Our investment in software and hardware together is around Rs40 crore," says Achan.

Adds T B R Joseph, deputy general manager, "We considered all the major core banking solution vendors in the country and found Laser Soft to be most suitable for our operations."

Apart from vetting the proposals submitted by the software vendors, CSB officials visited several banks that have implemented core-banking solutions to find out the customer's comfort levels.

They found that in many cases the branches were not issuing passbooks. Further the time taken to complete a transaction, say purchase of demand drafts was particularly high.

"In addition, many vendors have just the core banking solution and not the other software like cash management, rural banking, trade finance, RTGS, etc. On the other hand Laser Soft offers end-to-end banking solution," says Joseph.

The bank will implement the core banking solution across all the branches in phases. In the first phase 80 branches will be brought under the core banking solution and the remaining branches would follow in the second phase.

The solution is scalable to accommodate more branches as and when CSB opens new ones. According to Achan, the bank would open 50 more branches by the end of this fiscal.

Target Rs10,000-crore business by 2008

Completing a total business of Rs6983.72 crore (deposits Rs4288.85 crore, advances Rs2694.87 crore), Achan says the target for CSB this fiscal is Rs8500 crore this fiscal.

"Our performance is in line with the target. The total business as on 11 September, 2006, is Rs7328.92 crore (deposits Rs4473.97 crore, advances Rs2854.95 crore). We will touch a total business of Rs10,000 crore by 2008," he discloses.

Last fiscal the bank closed its accounts with a net interest income of Rs146.94 crore and a net profit of Rs6.14 crore. The banks investment portfolio stood at Rs1431.59 crore and yield on investment was 7.41 per cent. The gross non-performing assets (NPA) stood at Rs159.92 crore and the net NPA was Rs74.79 crore.

Speaking about the bank's cost of funds, Achan says, "Our cost of funds now is 4.78 per cent. Nearly 26 per cent of our deposits are low cost. We expect further increase in low cost deposits which in turn would reduce our funds cost." Last year the banks cost of funds was 5.16 per cent.

According to officials, the implementation of BPR would release people for marketing. The bank is earning well selling life and non life insurance policies of Birla Sun Life Insurance Company Limited and The New India Assurance Company Limited.

With a capital adequacy ratio of 11.23 per cent the bank has drawn up plans to raise Rs100 crore through a combination of rights issue and a public and private placement. However, the first will be the private placement of 60-lakh shares with foreign equity investors. "We have given our proposals to Reserve Bank of India (RBI) and await their sanction," adds Achan.

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