HDFC ERGO launches health claim services

Private sector company HDFC ERGO General Insurance has launched Health Claim Services, its in-house health claim servicing department, that will be a single window for customers for all healthcare related services.

“With this internal mechanism, we are planning to establish better control on the overall claim settlement process and improve the turnaround time with seamless, hassle-free and transparent services in health claim settlement,” HDFC ERGO General Insurance Head-Strategic Planning Group, Mr Mukesh Kumar, said in a release issued here.

The main objective behind this initiative is to facilitate faster and transparent claim settlement process.

Health Claim Services will not only provide personalised claim settlement services but will also act as a guidance centre for all healthcare related queries.

Under this initiative, HDFC ERGO has partnered with network service providers like pharmacies, diagnostic centres, ambulance and wellness centres to provide their customers best-in class health services in addition to the existing spread of over 3,000 empanelled hospitals.

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New General Manager for Bank of Baroda

Mr M.L. Jain took over charge as the General Manager of the eastern zone of Bank of Baroda on Monday. He was previously the Regional Manager (Jaipur region) of the bank's Rajasthan zone.

The eastern zone of Bank of Baroda include West Bengal, the seven North-Eastern states of Tripura, Manipur, Meghalaya, Mizoram, Nagaland, Assam and Arunachal Pradesh, Sikkim and Andaman & Nicobar Islands.

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Tech-orientation required for bankers: Shubhalakshmi Panse

Ms Shubhalakshmi Panse has been the Executive Director of Vijaya Bank for over two years now.

She has handled a range of assignments including field postings as she moved up the hierarchy. She was earlier General Manager with Bank of Maharashtra where she began her career in 1976.

She counts her stint as head of IT as one of her most interesting assignments. This gave her an understanding of the changes that were happening in banking and helped her mature as a leader.

She says, “Unless your thinking is tech-oriented you can't be a good banker. Any new customer project you take up, you should be IT-savvy. All bankers who are moving to the top should be more IT- savvy.”

In an interview at her Bangalore office, Ms Panse answered a range of questions on her bank and industry issues. This interview focused on how public sector banks are handling issues related to ATMs.

Excerpts:

What is the idea behind the consortium approach to purchasing ATMs? Will it save costs?

There are two things. One is to avoid duplication. Second, if the number (purchase order) goes up, my power to negotiate also goes up.

At my bank level, if I negotiate for 500 ATMs, it is a very limited number. I would get a better price if I deal with 5,000 ATMs.

However, there are only three vendors and the orders go to them. It all depends on how these players respond.

The second idea that is coming in is the White-label ATMs (ATMs that are established by non-bank entities and which can be used by customers of all banks). Today, there is so much of duplication of ATMs in cities, which is really not required. When we are going in for financial inclusion and going to the rural areas, it is essential that we don't waste money. Obviously, the resources are very limited. And that is why it has been rightly decided to go for this white label ATMs model. Banks will just have to plug and play and pay per transaction. That is an excellent model and we can really reap the benefits.

We need not put up too many ATMs in the rural areas. Any ATM to break-even requires 175 transactions a day. I will not get that kind of hits when I put an ATM in rural areas with a population of 20,000. So it is better to have a WLA and many banks can get the connectivity to the customer.

In your ATM experience, did you find other bank customers using your ATMs more or was it the other way round?

In our bank, I have found that the other bank customers use our ATMs more

So you are making money. How much do you get from other banks?

We must be making about Rs 7-8 lakhs a month. This may be because some of our ATMs are in areas where other bank customers are residing. I have looked at why my bank customers are not using my ATMs.

And we found out that our customers are residing somewhere else and they are opening an account in the branches that are nearer to their office. This happens to many other banks.

So how do you choose a location?

A location should be chosen with 2 or 3 things in mind. One, a place where there is a very young crowd. Second is it should not be on the main road as there should be lot of space to park. Third, it should be in a locality where there are lots of people so that even at nights it gets used.

You said it should not be on the main road but also a place where there is a crowd. Isn't it contradictory?

Typically in the residential areas, you see that there are people always there or if there are shops, people keep coming and buying.

The younger generation likes to come and draw in very small amounts. Rs 100, Rs 200…etc.

All these factors play a big role and when there is a big queue, you should have enough space for them. Another factor is that the younger generation likes to come there and chat. It serves as a meeting point.

If you have ATMs that offers small denominations, it will be a rage….

The only limitation is the size of the cassette inside the ATM. You can only have a maximum of three or four cassettes. Now, if I keep Rs 10 and Rs 50 notes, and somebody wants a huge amount, then to keep so many notes becomes a problem. Then, I will have to keep filling it up again and again.

ATM maintenance, cash uploading, the paper for the receipts – these are all very expensive affairs. When you install technology, you will also have to think in how much time it will take to start paying you back.

The cost per transaction plays a very important role, which we have still not thought too deeply about.

Some foreign banks do a survey every year.

They divide ATMs into four quadrants and figure out the cash cows and the laggards.

Immediately, the laggards (the ATMs which don't make enough money) are relocated.

We don't do that. We think that once an ATM is set up in one place, it should be there for life.

That professionalism, that business sense, must be developed by us also.

How long does an ATM take to pay back?

I look at it from the point of view of number of ATMs and the average hits. We see that some of the ATMs take nearly six months to get 175 transactions per day, which is the break-even point. The average hits for all the ATMs of a Bank put together is a good indicator. We divide that into city-wise data and see what needs to be relocated. We hold on for one or two years though.

Also the number of hits depends on the number of cards I have issued in a branch. If it is an onsite ATM and I have 4,000 customers, I must issue cards for all four thousand customers. These things only happen when your thinking starts changing. It is not taught in any school.

In terms of ATM adoption, what has been your experience in the cities that you have seen?

You will be surprised. I have seen Tier- 3 and Tier- 4 cities adopting ATMs and the number of hits increasing. The novelty factor causes then to shift to ATM usage. In tier-3 and tier-4 cities, handling cash is the norm. Credit card is not accepted in shops there.

That's why you need cash. So that's why usage of ATMs goes up. As far as the metros are concerned, the customer behaviour is largely settled and they are used to these things. Acceptance level there has become high. But in terms of growth potential, it is found more in tier 3 and tier 4 cities. The customer psyche has changed there. They want these things now, their expectations have gone up.

Earlier, the customers used to be scared. In my earlier bank, I had come across people who would ask what to do if their hands get stuck inside! They had a fear of technology. That's changing.

vageesh@thehindu.co.in

vardhini.c@thehindu.co.in

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Dhanlaxmi Bank hopes to return to profit zone post revamp exercise

Dhanlaxmi Bank expects to be back in the black next year by resorting to cost-cutting, rebalancing loan book, and consolidating operations.

As part of the cost-cutting exercise, the old-generation private sector bank has initiated steps to cut excess flab, reduce salaries and give up extra space in major metros and cities to save on lease rentals.

The bank had reported a net loss of Rs 36.87 crore in the October-December 2011 period, against a net profit of Rs 7.26 crore in the corresponding year-ago period.

Former CEO Mr Amitabh Chaturvedi had quit the bank in February in the backdrop of the loss incurred by the bank and exceptionally high operating costs.

On rationalisation of staff, Mr P.G. Jayakumar, MD & CEO-in-charge, Dhanlaxmi Bank, said an evaluation exercise is on to estimate the staff required to run the 280 branches.

Since February, the bank's employee strength has come down from 4,600 to 4,200. Those hired in the last three years on contract basis and at high salaries have had to take a 40 per cent pay cut. About 1,500 employees of the bank are on the Indian Banks' Association prescribed pay structure.

Rebalancing loan portfolio

According to Mr Jayakumar, the bank will not renew low-yielding unsecured corporate advances.

Dhanlaxmi Bank will channelise the funds so released to borrowers in the small and medium enterprises segment. Further, it will step up thrust on gold loans. Both these categories of loans will fetch higher yields.

Of the total loans of Rs 9,550 crore as on December-end 2011, retail loans accounted for 54 per cent of the loan book; corporate loans 29 per cent; SME 15 per cent; and agriculture 2 per cent.

The bank will increase its low-cost current and savings bank deposit base from 20 per cent of the total deposits to 22 per cent in FY13.

To divest stake in broking firm

The 15 per cent stake that the bank picked up in broking firm Destimoney will be divested. This move comes as the Reserve Bank of India has objected to the classification of this investment in the held-to-maturity category. Without this classification, the bank would have to make provisioning in case there is a mark-to-market loss.

Capital plans

Dhanlaxmi Bank plans to raise Rs 200 crore by issuing subordinated debt in the next couple of months. Further, it will raise Rs 200 crore by issuing preference shares to strategic investors by September-end.

Currently, the bank's capital adequacy ratio is low at 9.88 per cent. Of this, Tier-I capital is at 8 per cent.

“Once we mobilise the funds, our capital adequacy ratio will go up to 12 per cent,” said Mr Jayakumar.

Back to basics

The bank has dismantled the vertical structure created by the previous management, whereby the official handling liabilities did not know what was happening on the assets side, said Mr Jayakumar.

Dhanlaxmi Bank has reverted to the traditional branch banking model where the branch manager is responsible for the assets as well as the liabilities side of the balance sheet.

kram@thehindu.co.in , priyan@thehindu.co.in

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SBI to consider rate cut after RBI credit policy

State Bank of India has said that it will consider reducing the lending rates after the announcement of the Reserve Bank’s annual credit policy on April 17.

“Of course, we will look into reducing the interest rates in the future, but it will depend on the magnitude of the CRR cut (by the RBI),” the SBI Managing Director and Group Executive (National Banking), Mr A. Krishna Kumar, said at the sixth International Banking and Finance Conference here today.

“I expect the cut in the cash reserve ratio (CRR), but not sure about the repo rate,” he said while talking about expectations from the RBI’s annual credit policy which is scheduled to be unveiled on April 17.

CRR is the portion of deposit that banks are required to keep in cash with the Reserve Bank. At present, it is 4.75 per cent.

The SBI Chairman, Mr Pratip Chaudhuri, had earlier said that RBI might cut CRR by 0.75 per cent in its annual policy, but might retain the short-term lending rate at the existing level of 8.5 per cent.

“We have already reduced our interest rate on educational loan segment and we will also reduce the interest rate in the SME sector soon,” Mr Kumar said.

The reduction of interest rates in other segments, he said, “will largely depend on what the RBI does in its annual monetary policy to be announced on April 17”.

The state-owned lender is also targeting 20-25 per cent overall loan growth in almost all segments in the current fiscal.

“We target 20-25 per cent in the SME sector only and for overall growth of the bank, we aim at the same growth rate (20-25 per cent) during the fiscal as well,” Mr Kumar said.

On rising bad loans, he said: “we are also looking at a major improvement on the asset quality of the bank in the current fiscal”.

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