Exclusive | Karnataka Bank to become new-age digital bank, push co-lending, says MD CEO

The bank is also aiming to broaden its footprint in other states and strengthen its customer base in Karnataka.

Mangaluru-headquartered Karnataka Bank aims to become a new-age bank and is planning to go aggressive on digital banking services, Srikrishnan H, Managing Director and Chief Executive Officer (MD & CEO), Karnataka Bank, told Moneycontrol.

In an exclusive interview after his appointment as the MD & CEO of the bank, Srikrishnan also said that the bank is looking to push co-lending partnerships with fintechs and non-banking financial companies (NBFCs).

“We are a legacy bank with a history of 100 years. Now we are trying to modernise the bank from its culture to banking services. Also, we see co-lending opportunities in several segments and aim to expand our space there,” Srikrishnan said.

The bank is also aiming to broaden its presence in other states and strengthen its customer base in Karnataka. Edited excerpts of the interview:

As the new chief of Karnataka Bank, what is your target for the next three years?

One of the first things we are looking at is making the bank an entrepreneurial startup-like institution from a legacy bank. The bank has been profitable from its existence but growth has been slow compared to the industry.

Here, we are looking at transforming the bank into an entrepreneurial institution from its culture to operations which will give us immense opportunities for growth.

How do plan to become a new-age digital bank?

We are looking at growing digitally, where we will focus on client acquisition and services. In line with this, we have taken the first step and opened a 40,000 square feet technology and digital hub in Bengaluru, which will house dedicated teams.

Other than this, we will be looking at growing through collaboration and co-lending deals in different segments with fintechs and NBFCs.

Alongside our digital and co-lending growth, we will also grow through our existing branch network.

In line with your co-lending expansion plan, how do you view the first loan default guarantee (FLDG) guidelines governing banks’ partnerships with fintechs?

The guidelines from the Reserve Bank of India (RBI) open up opportunities to partner with fintechs for co-lending. Fintechs have a good hand on technology and instant reach to customers but they lack funding. This is where we see banks like ours can step in and boost lending to sectors like micro, small and medium enterprises and agriculture lending.

Other than this, the guidelines have provided clarity on underwriting of loans, which, in a way, creates another channel to grow our business.

In terms of lending, which segments do you plan to target?

We have strong demand in the retail, agriculture and MSME segments. Alongside these, we have seen a jump in growth in loans against gold. We are exploring digital gold loan opportunities and trying some partnerships.

Going ahead, we will look at targeting these segments aggressively, mainly through our digital channels. Also, we may look at working on co-lending partnerships for lending to startups and microfinance customers.

Are you looking at expanding to other states?

Our branch expansion plan will go on as usual. Currently, other than a strong base in Karnataka, we also have a network of branches in states such as Orissa, Maharashtra, Delhi, West Bengal and some South Indian states.

Lastly, what are some of the challenges you see for Karnataka Bank?
We have seen banks growing at a booming pace from the 1990s. We see that our growth, both physically and digitally, has been at par with some big private sector banks. But on the digital front, we see a lot more scope for us and all banks to grow.