Allahabad Bank slashes Prime Lending rates by 50 basis point the Benchmark PLR fixed at 11.00%

Allahabad Bank has decided to fix Benchmark PLR at 11.00 w.e.f from 1^st January 2004 which is 0.50% below the existing PLR. The revised Benchmark PLR policy announced by the Bank in response to recent RBI guidelines on Benchmark PLR will benefit a large category of borrowers. These will include Agriculturists, SSI units, Traders, SME’s and Housing Loan borrowers. For instance the cut in PLR will bring down the Bank’s home loan interest rates at levels of 7.25%, 7.75% & 8.25% for floating rates upto 5 years, 5-15 years and above 15 years respectively for both existing and new customers. These rates would now figure amongst the most competitive rates available in the industry.

The Bank has also reduced deposit rates for domestic term deposits having a maturity tenure exceeding 2 years by 25 basis points. The Bank is also targeting expansion of its FCNR (B) deposit base where the interest rate has been increased by 5 to 40 basis points for various currencies over varying maturities w.e.f 1^st January 2004.

Speaking to the press on the occasion, Shri O.N Singh the newly appointed Chairman & Managing Director of Allahabad Bank stated that the stage is now set to place the Bank on a higher growth path. Shri Singh said that the present business (Advances + Deposits) of the Bank pegged at Rs 42,000 crores is projected to grow to Rs 60,000 crores by March 2005 by adopting a series of initiatives viz.

• Segmentation of branches with reference to Business focus i.e. Identifying and nurturing deposit oriented, credit oriented branches and creating at least 10 super market branches by March 2005.

• Harnessing the potential of over 66% of its Rural / Semi Urban branch network where growth opportunities are more and competition is less.

• Increased focus on International business by setting up at least 2 OBU’s (Overseas Banking Units) and opening of 2 overseas branches by March 2005.

• Achieving 100% Branch Mechanization by March 2005 and implementing Core Banking Solution (CBS) in 400 branches.

• Providing Funds transfer facility under any branch anywhere banking through 400 branches

• Sustained thrust on retail lending by opening 100 more "Retail Banking Boutiques", which are spearheading the Bank’s, growth in retail financing.

Shri Singh further added that-

• Our branch concentration is in gangetic belt where there is vast scope for mobilising low cost deposits and aggressive lending in retail sector.

• Our customer base of over 14 million gives us a lot of scope for future business development by cross selling our various products and services.

• We are putting in place strategies to substantially bring down the NPA so that its impact becomes inconsequential on our profitability.

• The Return on Assets on account of the above measures will match with the industry.

Shri O.N Singh, elaborating further on the plans, stated that priority will be placed on Manpower development and its proper deployment. He added that the Bank’s rich intellectual capital is capable to take on the challenges of new age banking in the 21^st century. The strong pool of human skill already available within the Bank shall be further upgraded through internal as well as external training and priority will be placed on alignment of business with people system, talent and knowledge management and above all, improving people leadership qualities. Picking up of high potential employees for placement in business focussed areas of operation like Credit, Treasury, Marketing, Trade Finance, Retail activities etc. has been initiated. This will be followed by training and retraining of the manpower for upgradation of the required skills. The Bank will be exclusively earmarking one training college for IT training purpose to ensure achievement of 100% computer literacy by 2005.

Shri Singh concluded by saying that the present Banking scenario leaves no scope for a ‘me too’ approach. Proper focus together with strategic planning is the order of the day as the demanding customer is constantly seeking for innovative products and value added services. The Bank has embarked to capture a larger market share and it shall have to not only broaden its vision and extend its horizon, but put in place focussed business plans with due emphasis on people management and change in their mindset.