Starting off with humble beginnings as an institution to help uplift the rural masses, Sanasa Development Bank PLC (SDB bank) has grown from strength to strength and today dares to aim greater heights.
Striving to grow keeping the Micro and SME sector at the core of its focus, SDB bank pledges to continue its commitment to the deserving segment despite its massive growth drive which would call for focus in new market segments.
As a bank that was established by cooperatives for cooperatives, today it stands firm largely due to its ‘personal touch’ with customers.
As the bank gears up to embark on its journey towards the next decades, SDB bank Chief Operating Officer Kumar Mayadunne sat down with Mirror Business to share the entity’s journey, current status, and future focus.
Following are excerpts from the interview:
BY Shabiya Ali Ahlam
Reaching the 20 year mark, how has SDB bank progressed since its establishment?
This bank was started 20 years ago when the leader of the Sanasa movement founded the institution. The seed capital came from the grassroots.
When you are a cooperative bank you come under the supervision of the cooperative department .We fall into the category of LSBs.
We then wanted to grow but the bank saw the obvious limitations in doing up the capital. However we became a listed bank and fell under the supervision of the Central Bank (CBSL). There have been a lot of regulatory requirements in this period and we have met expectations.
We started off as a very small bank, but we have seen the growth in the last two decades. We have a balance sheet of nearly Rs. 70 billion and we want to reach the Rs. 100 billion in the next two years. One would have never thought we would become to the size we are now. Much thanks to the regulators we have reached this stage.
Why do you attribute much of your progress to the regulator?
Being regulated means you need to fulfill the mandatory requirements which push growth. It’s either ‘do it’ or ‘leave’, and we have been focusing on the former. It is in that context the progress is attributed.
There have been a couple of threats as well, such as the drive for consolidation that was announced few years ago. We were to either merge with a bigger bank or expand. We stood firm on being a single bank and put forward a plan to the CBSL on how we would continue to remain in that status. That was approved and here we are charting that course.
‘‘Our focus to the cooperative sector will not change. We are moving into international best practices and these are proven methods and projects. We have got the support and assistance of international experts due to the agreement with IFC. We have identified our three segments very clearly, towards customer value proposition.
Where do you opine SDB bank stands amongst other local banks?
We most certainly stand out due to our area of focus. Ambitious as we are, we are currently in the midst of taking a quantum leap and have embarked on a ‘Quantum Leap Project’.
When small it is easy to control, learn and correct mistakes if any. It won’t be so for long. With the quantum leap, our risk management is being completely reviewed now. We are simply getting ready for the future. We are gearing up to face challenges we might face in a few years’ time.
How has the bank diversified its client portfolio/segment to keep up with competition?
In the past we were only catering to microfinance, where we became some years back the world’s best Micro-Finance bank. We catered to the grassroots level. Now things have changed as the microfinance space has elevated in the country and the need is for more SME funding.
Our focus to the cooperative sector will not change. We are moving into international best practices and these are proven methods and projects. We have got the support and assistance of international experts due to the agreement with IFC. We have identified our three segments very clearly, towards customer value proposition. Very clearly our segments are cooperatives, retail, and SMEs. So any customer will fall into any of these categories.
SDB bank caters much to the SME sector, a high risk category, which when it comes to numbers does not appeal to many financial institutions. Tell us about that. How has it in terms of recovery?
The future of the country depends on SMEs and that is where growth is since participation is very high. They are people with a vision and with low overheads. What is noteworthy in this segment is their commitment to meet obligations. That is clear. Unless they have bad business ethics, but the majority is not that.
We are seeing a more brighter future for the SMEs. For all the banks the cake is getting smaller and smaller. And this is a good segment since it is highly represented. I would say that our experience in catering to this segment is having a low Non Performing Loan (NPL) rate.
It is high risk but it all depends on how you manage them. I must stress that it is only certain sectors within this segment that is high risk. But even those sectors we cannot ignore and stay away since they are important.
We are able to manage low NPL rates because of our experience in catering to this market. I must add that another reason as to why we are able to greatly cater to the SME sector is that we pay much emphasis on the ‘personal touch’ with our customers.
Where ever we go we are in touch with the Sanasa societies, so we know better about our customers and potential customers.
We will be expanding further our SME business soon. SDB will be opening SME centers around the country to uplift tis group. Through that, we are confident we will be able to manage the sector much better than we already are.
‘‘We are remodeling the bank operations. We are more into sales focus, where also more emphasis will be given to sales and marketing. In short we will be centralizing the operations.In that change of focus credit centralization is key for which we have formed a credit assessment unit in Maharagama.
What is your view of the regulatory environment? Is it facilitating enough to boost the sector and inturn the economy?
The CBSL is very supportive. They understand our culture. We are a bank with a cooperative division. We were formed by that segment so we cannot forget about them or leave them behind. We owe it to the founders of this bank.
Personally I feel that the state has to pay more attention to the cooperative sector. They are doing a silent service to the national economy. They are the one most in need and are going on without being a burden to the government.
The government has to intervene. There needs to be a more proactive support to guide and bring them on to a correct path in terms of business operations. The attitude should be positive towards them. And that would help us in many ways since some discipline would be brought in.
What changes would you like to see in the environment? Any improvements that would help facilitate the drive of SDB bank?
We are seeing industry developments where numbers are getting better. The CBSL is positively supporting the banking sector. We can see their desire to help and put up
We have had regulatory support right from the beginning. We as a bank cannot expect anything more. I must stress that there has been fair play. They cannot be serving us with different spoons. If they did that, we will fall
‘‘The customer we had 20 years ago is not what we have today. The needs change. The newer generation wants convenience, and we are on track in catering to that in terms of facilitating SMS, mobile and internet banking
out from the competition and we will not be aggressive in our drive. They want more and proper controls, and that we find encouraging. It pushes our staff to be better.
What is the outlook for the bank in the medium and long term?
We have a vision in becoming a commercial bank but before getting there we have a lot of work. Processes have to be changed and uplifted. Our people have to be more skilled. Automation is a must as customer needs will change.
The customer we had 20 years ago is not what we have today. The needs change. The newer generation wants convenience, and we are on track in catering to that in terms of facilitating SMS, mobile and internet banking.
We also have to look at our own systems now. Our own cards, even credit cards as we go on. Such plans are in the pipeline.
We are remodeling the bank operations. We are more into sales focus, where also more emphasis will be given to sales and marketing. In short we will be centralizing the operations.
In that change of focus credit centralization is key for which we have formed a credit assessment unit in Maharagama. We will soon be able to finalize loans within two to three days.
The entire restructuring will be finalized by end of December this year.
What new would we be seeing from SDB bank?
We are investing with a futuristic vision, so there will be a lot of ‘new’ that will be seen from SDB bank. Our existing branch network will be extended island wide. We have 93 branches currently and by 2020 we want to have 120. In the rural areas we are well represented so we have a good reach there. We want to increase our presence in the Western province. We are looking to support more upcoming businesses and Western Province is a hub. We aim to reap the benefits of that growth.
Our ultimate target is to be a commercial bank and we are well on track towards that.
We are well-geared both strategically and operationally to undertake the next phase of our journey. We have become a more focused business, striving for long-term, responsible growth that will combine profitability with the nation’s development. We have already laid a solid foundation built on upgraded products, cutting edge technology, an efficient delivery base and a good capital base to move forward on an upward trajectory.
Finally I must stress that our workforce across all levels have being our main pillar for the position we want today. Without their dedication and loyalty, we would not be what we are today nor would we be able to confidently take a leap forward.