If things go as planned, Chennai-based Indian Bank will be merged with Kolkata-based Allahabad Bank on 1 April. Padmaja Chunduru, chief executive of Indian Bank and the anchor for this merger, told Mint in an interview that she is relying on video conferences and telephone calls to train and communicate with staff as movements have been restricted due to coronavirus (COVID-19) outbreak. Edited excerpts…
How is the COVID-19 pandemic affecting the merger process?
In the second half of March, we were planning a lot of training sessions but as the concerns around COVID-19 are evolving, we are changing the action plan and are moving more towards technology-driven initiatives. Every day, I am addressing 100-150 employees in two-three stages so that the connect is not clogged. It is important for us to keep communicating and since I cannot travel to these places, I have VCs with the staff. We are speaking with customers over the phone as well. I was also supposed to meet customers in Kolkata but that did not happen because of restrictions. So, I am calling up people and speaking to them.
What is the update on integration of processes and information technology?
We have been working on it for the past five months and as per schedule, things are on track, even the signage has been decided and advisories to all branches have been issued so that they can go ahead with changing it on 1 April. The training was to happen in-person in Chennai for agents who will go and connect with all the branches but that is happening over video conferencing (VC). So, almost everyday we have VCs with branch and zonal managers to convey the changes in products and how the core banking system (CBS) platform will look like on the first day. We have worked out that basic minimum transactions or about 5-6 transactions will be possible from both banks from day one. While immediate requirements for basic transactions will be available to both the banks on day one, the rest of the CBS will gradually be integrated and will take about 9-12 months to be completed.
How are you addressing employee concerns related to the merger?
A voluntary retirement scheme (VRS) is not envisaged in the scheme itself and even the government was clear that there will not be any rationalisation of staff. For this amalgamation, there is no big overlap of branches and there are hardly 150 to 200 branches that are in close proximity of each other. The merged bank needs all the people in both the banks and since people keep retiring, the banks need the branches to run and do not see any reason for VRS. In fact, we are assuring staff that there will not be any disruption immediately and at least till scale 3 grade, people will not get transferred across the country. We need continuity in the branches and customers need to see the same faces to be comfortable. So, while promotions are happening before 31 March, the transfers will be done from end of May or later. This year will be a year of consolidation because the merger will be on and we will close a few zonal offices in case of overlaps. The administrative offices will get merged faster, the large corporate branches will be merged, recovery branches will be merged but the decision on retail branches will be taken at a later stage.
What will be the focus of the merger entity in terms of its loanbook?
Allahabad Bank has 60% of its loans to corporates and the rest to retail customers and Indian Bank has 60% to retail borrowers and the rest in corporate loans. So, it is a good mix and ultimately, we end up with somewhere around 48-50% of the loan book in corporate loans. I believe that we need both kinds of loans on our books. The strength of both the banks is in retail, agriculture, small businesses and with the bigger balance sheet after the merger, we should be able to do better risk management and better due diligence. We need to invest in all those skillsets and verticals. So, as one of the bigger banks, I do not think we can shy away from corporate loans.