Retired bankers and those with a couple of decades of banking experience may want to take a shot at entrepreneurship, if the outsourced model of setting up branches being envisaged by Suryoday Small Finance Bank is anything to go by.
The bank is setting much in store by the Reserve Bank of India’s banking outlet guidelines, which allow banks to open fixed point service delivery units (banking outlets), manned either by the bank’s staff or its Business Correspondents, to ramp up on-the-ground presence.
Further, by seeking to rope in the aforementioned category of bankers as partners, the bank is trying to ensure that banking outlets are set up at about one-fourth the cost it would otherwise incur if it were to roll them out on its own. “The banking outlet guidelines have come in…So, the definition of bank branch itself has now been redefined as banking outlets. We see this as a massive opportunity to have a lot more outlets than what had we planned earlier.
“This means we have to really identify good partners — bankers who have just retired or taken voluntary retirement, or those who have been working in banks for 20 years (and don’t want to be transferred all over the place),” said R Baskar Babu, Co-founder, MD and CEO, Suryoday SFB.
So the bank’s pitch to prospective banker-partners is that they should put up branches, take staff on their rolls, and take up the responsibility of training and retaining staff.
In return, the partner will earn fee income (earned from mobilising deposits and sourcing loans) to cover all expenses, including rental and staff remuneration. “We are speaking to some good partners. So, to start with, each partner can set up three or four outlets. As the outlets stabilise, probably there will be scope to expand.
“We will help out the partner in putting up the first two outlets. We will put up the basic infrastructure. We will identify the place.
“The partner will only have to pay the rental. The model is emerging,” explained Babu.
For example, if an outlet is able to originate 10 loan transactions with an average ticket size of ₹2 lakh and also garner deposits amounting to ₹25 lakh in the first month of its operations, then it will, at a pay-out rate of, say, 1 per cent, earn ₹45,000 as fee income. As business increases, so will the outlet’s earnings.
Babu said the bank is working out a mechanism whereby each outlet can make around ₹2.50 lakh of fee-based income per month.
“What the banker brings in is his credibility; he knows how to take care of the customers.
“He brings in all the systems and processes for us, he recruits good quality people, whom we also train, and then he starts. We want to have a remuneration structure which is reasonable, good and profitable.
“It all boils down to choosing the right partner so that there is no expectation-reality gap. …All these outlets will have one of our own personnel for quality management,” said Babu.