The dominating motive of an officer whoever is assigned as the Manager of a Branch is to lead the branch towards making profit.It is a branch which has already made profit,it is still the aim of the newly appointed manager to enhance more profit.Nevertheless,it is observed that most of the managers who took lot of pains to divert his/her branch towards making profit has failed.The aim of this article is to find the ways and means as to why these branches have failed and also to pave the way for the newly appointed managers to follow a successful way to lead a branch towards making profit in the present day banking scenario.
We as a Govt.concern unlike other private banks have two objectives to be achieved.
1.Earning Profit.
2.Uplifting the living condition of the poor by way of financing the development.
Self employment projects etc.in order to assist the government to achieve economic development through "poverty alleviation".
No man can give a helping hand to another if he cannot stand on his own feet.Similarly,every trading establishment should earn profit to have a stability first in order to ensure the continuity of the business.Therefore,we cannot deny that we do not have profit making motive.On the other hand we being a govt.establishment have its bounden duty to uplift the social condition by improving the living standards of the poor who are wallowing in the poverty circle.Among these two objectives what looms large is earning profit because so long as we earn profit we would not be in a position to fulfill the 2nd objective.How does a Branch Manager lead his branch by balancing these two contradictory objectives.It is not just a "cake walk"but it might be a little "tight rope walking".
The subject "how to lead a branch towards making profit" can be discussed theoretically and practically as well.In the field of Management Studies,there is a very popular and practicable theory called "Swot"analysis.If a manager were to apply this theory in his day to day work it might lead him towards success.
What is "Swot" Analysis......
S denotes Strength.
W denotes Weakness.
O denotes Opportunities.
T denotes Threats.
Be it a bank or any other trading establishment,this theory can be put in to practice.
How can we apply this theory
At the time of talking over your branch,you can pay much attention to identify the "Strength" of your branch.The strength sometimes may be your team in the branch or sometimes your having a very good customer base.It is therefore up to you to identify the strength of the branch.
On the other hand it might interest you to identify the weakness in your branch.This is also factor to be reckoned with by a manager seriously.Then only you would be able to adopt alternative methods to avoid weakness.Establishing a branch far away from the town may be the weakness of your branch.If the weakness are identified you can take alternative measures.
The most important factor to be considered is to see the opportunities in development business.For example;if a branch is located in a highly commercial area there may be much scope for increasing the granting of loans.On the other hand if a branch is located in an agricultural area there may be more opportunities to grant agri. loans and canvassing more savings accounts too.Therefore the identification of opportunities to develop business is an important fact as far as a branch manager is concerned.
Apart from the above mentioned facts the manager should identify the "threats" for his/her branch.The availability of many other banks in his area may be a threat to develop the business of his branch.Sometimes the availability of non productive/excess staff in a branch may be a threat to the branch in terms of the erosion of considerable amount o income of the branch thus averting of earning profit.If a manager should be in a position to identify these four factors,it would be much advantageous for him to lead his branch towards making profit.
Every manager should realize that he does not have the "Midas touch" or a he that would lay golden eggs.Therefore,they should select their path of adopting practical ways of developing business in a branch.There are two main factors to be taken into account,when leading a branch towards making profit.They are:
1.Increase income
2.Decrease expenditure
A branch income is divided into categories
1.Interest Income
2.Fee-based Income
Interest Income
To increase interest income of a branch the manager should pay his attention to increase granting of quality loans.In this endeavour he should try his best to sell our various types of loan products.Leasing,Pawning granting of loans, overdrafts etc..are major interest earning sources of a branch.
Fee-Based Income
Income earned by a branch other than interest is called fee based income.This includes commissions,rentals,handling charges,encashment of foreign drafts,issuing Bank guarantees,purchase of cheques,increase granting of the bank lockers,payment of salaries of companies with a considerable charge etc.and many other fee-based services.there is scope for a branch for increasing this business.
Decrease of expenditure
Expenses of a branch is also divided into 2 categories.They are,
1.Interest expenses
2.General expenses
The ripping effect of the increase of deposit of a branch is the increase of interest expenses simultaneously.Action should be taken to increase income surpassing the expenses.The credit deposit ratio will perform an important role in this type of situation.To make profit of a branch this ratio should be at least 60% to 70%.That means a branch should grant advances at least 60% out of the total deposits.The increase of demand deposits and granting of loans against fixed deposits are some temporary measures to be adopted in reducing the burden of interest payments.As far as possible a branch manager should take action to reduce the expenditure such as telephone bills,electricity bills,purchase of unnecessary stationery,photocopy expenses etc.The necessity of doing overtime,out of pocket,specially weekend work should be reviewed.No such work is allowed for routine work.However,if such work is proposed for the activities on the increase of business it should be encouraged.It is not advisable to make a branch profitable by adopting a strict control of expenses.The inevitable consequence of such action would be the shrinking of business on the increase of business such as expenses for deposit mobilization campaigns,recovery campaigns,advertising should be increased for the purpose of enhancing business.
Motivation of Staff
Staff meeting should be called at regular intervals and participants must be made to be aware of the position of the Branch in particular and motivate them to achieve the targets set for the Branch.At the same time the opinion of the staff regarding the issues and concerns of the branch should be consulted and also cutting down of the unnecessary expenditure and various other factors in achieving goals should be explained to them and support should be sought to achieve the goals as a team.The decisions taken by the manager himself should not be implement arbitrarily but everything should be done with the consent of the staff.
Recovery of Non Performing Advances
It is our experience that some branches have unbearable amount of non performing advances.Whatever the positive action taken by the Manager of such a branch to improve business,good results cannot be achieved due to heavy burden of provision for No Performing Advances.Therefore,leading a branch towards making profit is a far cry.The Manager of such a branch should realize that inter alia he should prioritize recovery of Non Performing Advances for which an aggressive recovery campaign should be launched.Action should also be initiated in terms of the laid down procedures in the bank for expediting the recovery of these loans.Action also should be taken to write off long outstanding loans transferred to NPA for genuine reasons.
We should not overlook the fact that a successful recovery action has its double effects in many instances.They are the possibility of recovering the loan with up to date interest and the possibility of recovering the interest provision already made for the particular loan.The impact of these activities will no doubt give a momentum to the recovery campaign of the branch.
Promotion of Pawning
As far as leading a branch towards making profit is concerned yet another contributory factor to be reckoned with the enhancement of pawning business.Very high percentage of income of a branch specially in rural areas represent interest received on pawning.Therefore, managers of these branches should give priority in developing pawning systems extending the business hours,launching weekend banking for pawning business,giving an expeditious service to the customers and maintaining very good customer banker relationship are some of the guidelines to be followed in this regard.The special feature in granting more advance in this field is tantamount to increasing the interest income day by day.The 2nd way out of these advances is also very satisfactory.The probability of transferring these advances into non performing section is therefore,very rare.In the above circumstances,the manager of a branch should make every endeavor to promote pawning business.
Granting of Temporary Overdrafts
It is apparent that some managers who are over enthusiastic and impatient of making profit for his branch are relying on granting temporary overdrafts since they think that it is an easy way of leading a branch towards making profit.although there is no other loan product which can earn higher interest rate like temporary overdrafts,the manager should not be over stimulated to making profit having resorted to same.Since it is like a weapon with both sides equally sharpened,it is desirable to avoid the granting of TODs as much as possible.By this endeavor managers can achieve two objectives pointed out at the beginning of this article simultaneously.
Reduction of Excess a Staff
With the implementation of ICBS most of the work in the Branch handled manually are channeled through the system.As a result many of the branches have become over staff.If a branch has reached the "break even point" which means the income and expenditure of the branch is equal,the manager is in a position to show the operational profit by reducing one or two excess staff.Therefore,keeping a minimum staff in a branch is conductive for making profit.
Customer Care
Whatever is said and done to increase business what is more important is customer care.It is in that sense the concept "the customer is the king" has been derived,which means he is the person who brings profit,prosperity and bright future for you.One of the charismatic leader in India Mahathma Ghandhi has mentioned "you are not doing a favour by fulfilling a requirement of a customer who visited your establishment,but he himself is doing a favour for you by visiting your business place".This is one of the ideal expressions that has been made regarding the importance of the customer care which the managers would do well to remember.
Conclusion
In the process of leading a branch towards making profit,there are other contributory factors which should be achieved simultaneously.They are:
1.Fulfilling of the vision and mission of the Bank.
2.Making the bank's contribution favourable.
3.Availability of action plan to achieve goals and targets.
Above all,what is to be emphasizes is that you should be a person of positive approach.Then only you would be able to follo the above guide lines.
Given the priorities to implement the above course of actions the managers would be able to overcome all set backs and reverses that were faced in making profit.The successful manager can make his presence felt to the management by showing better results.
To conclude may I quote "Lokopakaraya" a famous Sinhalese poetry book for your attention.If the road that you have to travel is smooth and if your vision is clear,why are you stepping into wilderness as if you were sightless.