Aryapuram Bank aims for R1000 cr biz
Aryapuram Cooperative Urban Bank, Rajahmundry in Andhra Pradesh, has home loans is its biggest business
Aryapuram Cooperative Urban Bank has 15 branches and 4 ATMs in the state of Andhra Pradesh. In 201617, the bank had added 3 branches and 2 ATMs, while it planning to have 3 more branches by the end of 2017-18. According to Challa Sankara Rao, chairman of the bank, 1 branch was opened at Danavaipeta, Rajahmundry recently and 2 will be opened at Visakhapatnam and Guntur soon. ATMs have been commissioned at Danavaipeta and Kakinada while it is planning to have 2 more ATMs in 2017-18. The bank has shifted some of its branches from higher floors to the ground floors and had air-conditioned the branches and given better interiors to them in the last 12 months, according to Rao. The bank has 92 employees. Gode Sudhakara Rao is the CEO at present. In 2015-16, the bank had 80 people on its rolls. Business per employee had reduced to `10 crore in 2016-17 from `10.61 crore in 201516. Chairman Rao says the bank intends to recruit marketing professionals to handle business development at branches.
The bank had 1.68 lakh customers as of March 2017. It has reduced interest rates on housing loans, gold loans and mortgage loans in order to attract new clientele. “We are hoping to increase our customer base to 2 lakh by 2018. We have increased repayment periods for housing / mortgage loans,” says Rao. The bank is an ‘A’ graded bank with own funds of over `71 crore and 90,000 shareholders. It has been in existence for 99 years, has CBS.
“We have our own 3-storeyed building housing our J.N. Road branch, which offers some 750 lockers, located on a single floor, for the customers. We are now in the process of constructing a 4-storeyed building to locate our head office and the main branch. This building will have all the latest facilities, conveniences,” says Rao.
The bank had implemented CBS from Finacus IT Solutions. The bank had engaged Somayagi Group as an IT solutions consultant. The bank is proposing to introduce mobile banking and IMPS upgrade in 2017-18 and it has earmarked `90 lakh. There are 6 members in the IT team. The ATMs of the bank are NCR make. It operates ATMs 24-hours-aday and all ATMs are manned by security personnel 24-hours. 50 transactions are happening per ATM per day.
The bank essentially serves low and medium income segments, which forms its core clientele. These customers include traders, workers and laborers for whom it offers credit at a lower interest rate. The bank’s deposits stood at `577.28 crore as on 30 June 2017, up from `573.77 crore as on 31 March2017. Loans were `341.12 crore, up from `336.76 crore. The bank has achieved a growth rate of 9.39% during 2016-17 for deposits and 3.80% for loans for the same period.
“We have given housing loans of `260.98 crore (77.5% of the total loans), gold loans of `40.40 crore (12%) and CC/ OD loans of `13.95 crore (4.15%). We have also financed `65 crore for an infrastructure project identified by the Andhra Pradesh government - construction of a shopping complex in Rajamahendravaram. We are strengthening our housing finance and gold loans portfolio in the next one year. The loan sanctioning time is only 4-6 working days. After pre-sanctioning visits, loans are sanctioned to all eligible applicants,” says Rao.
The gross NPA and net NPA of bank stood at `21.65 crore (6.81%) and `8.76 crore (2.87%) respectively as on 31 March2017. Rao maintains that NPA recovery on an ongoing basis is top priority for the bank and all the staff members are personally in touch with the borrowers to recover.
Third Party Products
The bank has a tie-up with SBI Mutual Fund for selling its mutual fund products, United India Insurance Co for insurance products to its members as well as borrowers and Sri Ram Life Insurance for group life as protector insurance products. The non-interest income of the bank had substantially decreased from `77.63 lakh in 2014-15 to `45.75 lakh in 2015-16 but has bounced back to `56.32 lakh in 2016-17. Rao explains that the bank has introduced Group Life Protector Scheme with low premium to enable borrowers to get insurance protection against accidental death or natural death by which the outstanding loan is covered.
The bank is targeting to achieve deposits of `646 crore and loans of `401crore, that is, a total business of around `1000 crore by March 2018. For March 2019, Rao says the targets are deposits of `724 crore and loans of `464crore, which would be a total business of `1200 crore.
J. N. Road Branch
Challa Sankara Rao intends to recruit marketing professionals to handle business development at branches