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Issue Highlights

UCO Bank Re-Engineered

Intro: Arun Kaul, CMD, UCO Bank, explains how he changed the business model, increased touch-points and market penetration, expanded customer-base and thus transformed the bank to its present avatar:

In UCO Bank, there used to be very little thrust on branching out; there wasno concerted effort for customer acquisition; the branches were unattractive, the products were defective and customer service often inadequate. How could this situation be remedied? By just ensuring efficacy of the business enablers – the people, processes and technology. The results were: savings bank accounts doubled from 1.06 crore as on March 2010 to 2.25 crores as on December 2014. The bank’s card-user base jumped almost 10 times in less than 5 years to reach around 53 lakh users.

Says Arun Kaul, CMD: “Branch expansion and customer acquisition went hand in hand.We built a multi-channel relationship with the customers based on user preferences, ensuring uniformly good experience across all the channels of interaction. We understood customer needs in rural India as well as of GenX and developed differentiated products and services for the different segments. We offered attractive products/ facilities at most competitive cost. We strengthened and convinced customers to avail ADCs so as to save substantially on transaction costs and overheads, like moving into smaller-sized branches.”


One thing the bank importantly did was to shift the business model from bulk to retail. So, from 42.13% of total deposits on 31 March 2010, the percentage of bulk deposit plus CDs reduced to 20.17% as on 31 December 2014. CASA deposits grew from 20-21% in 2010 to around 32-33% currently. “We shed volatile and costly bulk deposits and focused on stable and low-cost deposits. There was over dependence on bulk business leading to risk concentration. By acquiring more and more retail customers every day, the bank is boosting its core deposits – from 57.87% as on 31 March 2010, to 71.81% as on 31 December 2014 – and building a stable low-cost fund base,” points out Kaul.


During the 57-month period from April 2010 to December 2014, the bank opened 809 new branches (against only 433 opened in the preceding 292 months between December 1985 and March 2010). It reached a level of 2961 CBS-enabled domestic branches as on 31 December 2014. These new 809 branches are spread across 387 districts, 369 of which were under-banked. Kaul says that 79% of the branches are in rural/semi-urban areas. The endeavor has been to make banking with UCO Bank a pleasant experience through visible and conveniently located branches (all air-conditioned). There has been improved branch layout and ambience. “I started ‘space audit’ of the branch’s premises to avoid under-utilization or wastage of expensive office space. Branches have been empowered. Now, business is being originated and driven by branches in place of HO,” adds he.


Against only 477 ATMs as on March 2010, in the next 4-year-9-month period as many as 1685 new ATMs have been installed across all states and union territories. s on 31 December 2014, the bank has 2162 ATMs out of which 53% are in rural and semi-urban areas. They cover 440 districts, 348 of which are under-banked.


UCO Bank has introduced systems, procedures and apparatus to monitor slippages on a real-time basis. There is proactive, continuous monitoring of irregular loan accounts. The bank has frequent dialogue with the borrowers and mentors them on how to weather difficult economic conditions. Genuine defaulters are provided hand-holding support. For others, the bank vigorously pursues all recovery channels like arriving at compromise settlements wherever appropriate, holding lok adalats, holding recovery camps at branches/ cluster of branches, taking recourse to SARFAESI Act and sale of assets of defaulters.

“I implemented a rigorous risk management policy. In corporate lending, the bank is focusing only on highly rated corporates. Assets had been deteriorating and there were lot of unreported / undetected NPAs. There was ill-equipped risk management, credit monitoring, lack of planning and absence of urgency in recovery efforts. For assets, we chose to focus on retail segment, agriculture sector, MSMEs,” says Kaul.


There have been several retail business initiatives in the last 4 years. Special savings deposit schemes have been launched for defence personnel (UCO Veer Shakti) and minors above 10 years (UCO Smart Kid). There are different variants of home loans, education loans, UCO property loans, UCO CA loans, revamped gold loan, etc. The bank also tied up with Bank Bazaar for lead generation and introduced facility for online home/car/ education loan applications through its website.

The bank has put a thrust on fee-based income like remittances, government business, LC bills discounting, etc. From just 5 on 31 March 2010, the bank’s business correspondents leaped to 4317 as on 31 December 2014.

Kaul says: “15 deposit schemes of different durations, coupons, minimum and maximum deposit ceilings and value-added features were successfully launched. Between March 2010 and March 2014, retail assets have risen 83%.”


There was problem of an aging workforce in the bank, not conversant with information technology, lacking in customer handling skills and product knowledge. The bank put maximum stress on skills upgradation through training and lateral recruitments. The training system has been strengthened / recast to reiterate from time-to-time the basic banking practices to be followed in the CBS-environment.“My motto is to develop domain knowledge in different spheres of the bank’s activities through specialized training on credit, forex, risk management and priority sector lending and also by building managerial and leadership competencies among employees by organizing executive development programs,” says Kaul.

The various training programs being held by the bank are: ‘Chetna’ to impart soft skills and increase awareness about the bank’s products and services; locational training programs at all zones/ circles, to train each and every employee; workshops for zonal heads and deputy zonal heads; first-time-branch-head training program; leadership program for women employees; post promotion training to all promotes. Apart from training at the bank’s regional training colleges, officers are also sent to reputed training institutes both in India and abroad for advanced or specialized trainings. Members of top management make it a point to interact with the trainees during various in-house training programs.


Simultaneously, the bank has started a big recruitment drive to induct new blood. During April 2010 to December 2014, IT recruited around 7400 people in various categories which included lateral recruitment of professionals like MBAs, CAs, IT specialists. Percentage of officers below 30 years stands at 34.10% as on December 2014 from merely 7.28% as on March 2011. The average age of employees has come down from around 50 as on March 2011 to 44 and that of officers to 42 years, as on December 2014. Says Kaul: “Officers below 45 years have jumped 3 times in the last 3½ years and toady constitute 55% of total officers’ strength, as against only 18% as on March 2011. 5 years hence it will be a truly young workforce bringing in dynamism and modern outlook.”

In order to equip the newly recruited officers to handle immediate and long term organizational responsibilities, senior executives have been tasked to interact and groom these officers.


The bank has undertaken several employee engagement initiatives – like launching an official Facebook page (UCO Sadasya) for the employees to provide an interactive platform for communication; issuing weekly circulars on workplace etiquettes, health and fitness; and sending greetings/ messages from top management on festive occasions, employee birthdays, promotions. To ensure openness and transparency in performance appraisal of employees, an online APAR system has been put in place wherein all employees apart from doing their self-appraisals can view the ratings and observations of appraising authorities.


The bank relies on the norm of being capital-efficient and cost-conscious. It revisited systems, procedures and processes to control expenditure. “I decided growth has to be profitable and capital-efficient. We started acquiring assets with low risk weights such that incremental capital requirement is not large,” says Kaul.

All these steps helped reduce the cost to income ratio substantially – 31.5% for the Q3FY2015, which is one of the lowest in the industry. “We acquired government land – at much cheaper rates than market rates – for building our own office and residential premises to enhance our fixed assets and laying the groundwork for the bank’s future expansions (at Rajarhat financial hub, Ahmedabad, Derha Dun),” says Kaul.


The bank’s ATMs allow tax payments, capture of Aaadhar number and UCO Mobile Banking Registration. The bank offers e-banking facilities including viewing transaction history, online FD & RD account opening, online application for selected retail loan products, fund transfer (to 3rd party/RD/loan account, NEFT, RTGS), utility bill payments, payment of state and central taxes and customs duty, ASBA, online share trading, e-ITR filling, Tax Credit Statement (26AS) and many more. It also provides m-banking facilities (available on handsets running on Android, Nokia Symbian, Windows, iOS & Blackberry OS); fund transfers, informational service and services like mobile recharge, blocking debit card, ATM/branch locator. Other facilities made available for customers include online account opening, E-lobby, pass book printing kiosk and cash deposit machines at selected branches, OTP and CAPTCHA facilities for secured online transaction (e-Commerce), balance inquiry and mini statement display through missed call, SMS alerts for various types of transactions / information, issuance of VISA enabled EMV-chip debit card, RuPay enabled Debit cum Identity Card (Combo Card) allowing online college fee collection.

“We leveraged IT to ensure customer convenience, expand reach, lower costs, increase productivity and improve market share,” says Kaul.


The bank had implemented CBS only in March 2010.There wasserious knowledge gap, little attention was paid to use of technology in improving biz processes, product development, brand building, MIS, control and supervision. However, it has now caught up and the systems are on par with any other ban. It is now undertaking implementation of biometric authentication system for its employees at all branches as a second factor authentication before logging to the CBS system (over and above user id and password).

There has been extensive use of the bank’s state-of-the-art in-house multi-point video conferencing and executives’ iPad FaceTime facilities for performance review, exchange of views and internal marketing – thereby saving costs and valuable management time, while improving organizational efficiency.

Kaul says that technology solutions are being used in areas like MIS, financial inclusion, loan processing (LAPS), treasury operations, risk management, back office operations, monitoring of branch and zonal office functioning, personnel functions like on-line submission of PAR, imparting off-site trainings and e-learning for UCOites through employee-only access website.

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