Project Name: Financial Inclusion/ Economic Value Add

Institute/Organisation: Chaitanya Godavari Grameena Bank

Award Category Applied For: Financial Inclusion & Deepening Award
Status: Received the Skoch Award in Order-of-Merit Category

Brief Overview of the Project

Chaitanya Godavari Grameena Bank (CGGB) is a Regional Rural Bank (RRB) formed on
amalgamation of Chaitanya Grameena Bank (an RRB operating in Guntur district) and
Godavari Grameena Bank (an RRB operating in East Godavari and West Godavari Districts)
on 3 March 2006.
CGGB is sponsored by Andhra Bank and is having network of 158 branches and 13 own
ATMs. The aggregate business of the bank as on 31 March 2015 is Rs 4180 crore with
deposits of Rs 2186 crore and advances of Rs 1994 crore.
There used to be heavy dependence on borrowings from NABARD and Andhra Bank. In
order to strengthen the bank financially with its own resource base and good liquidity, which is
vital to serve its clientele to their satisfaction, a serious thought was given to increase the
deposits base during the year 2014-15. On the basis of performance of the bank during the
first half-year, a strategy was evolved to accelerate the growth of the deposits.
The segmentation of depositors base on the basis of period of deposits and historical data
analysis led to formulation of new schemes of deposits. The strategy included expansion of
branch network with thoughtful selection of locations with impeccable potential study and
incentivising the performance in respect of new schemes.
The strategy evolved good results and the growth in deposits during the financial year 201415 was 42 per cent, a figure that had no match with industry average or any group or subgroup average. This significant growth in deposits had turned the profile of the Bank from one
of high Credit Deposit Ratio (CD Ratio) to one with less than 100.
The liquidity position of the bank which had a bearing on financial strength is made quite
comfortable by March 2015 which will enable the Bank to accelerate its credit flow to the
needy sections of the society in its area of operation. This in the coming years will have a
significant impact on farmer community more particularly small & marginal farmers and tenant
farmers who had been the large chunk of neglected and disadvantaged sections of the
society.
In fact, Financial Inclusion is intended for bringing those sections into the financial main
stream It is ardently believed by the top management of the bank that only when the bank is
financially sound under all parameters, it could cater to all sections of the society in credit
dispensation and more particularly those who are to be brought into the fold of banking
services under Financial Inclusion.

Objectives of the Project

. To increase the network of the bank by opening at least 15 new branches.
. To identify the locations for those new branches with high potential for deposit mobilisation.
. To review the performance of the branches at regular intervals and undertake segmentation
of branches in regard to potential for growth in deposits.
. To identify top 10 performers in a week and notify them to all the branches by mail every
Saturday.
. To review the Net Interest Margin (NIM) at quarterly intervals and revise the interest rates on

deposits by segmentation of the interest rate slabs on the basis of period of maturity.
. To examine the behavior of growth and renewal of deposits across the branches under
different periods of maturity and derive clues there from for deciding upon changes in interest
rates.

Challenges the Project Faced Pre-deployment

The overall strategy was to make the efforts to increase the resource base of the bank so as
to bring down the CD Ratio to an optimum level. The aim was to improve the financial
soundness of the bank by improving the liquidity position to a comfortable level. Streamlining
the processes was full with challenges.

Description of the Solution Implemented

The bank could surpass the corporate goal of 35 per cent growth in Deposits with a target of
Rs 2075 crore for March 2015 (Deposits stood at Rs 1538 crore for March 2014) by touching
a remarkable figure of Rs 2186 crore by 31st March 2015 with an astonishing growth rate of
42 per cent.
The key success factor is evolving of strategies that are: (i) Practical (ii) Research based on
historical data and behavioral studies (iii) HR motivated While evolving the strategies for
increasing the resources base of the bank. These were taken into consideration by the top
management of the bank. Even though, increase in CASA deposits will be quite cost
effective, the very fact that most of the branches of this bank are located in rural areas was
not lost sight of.
The behavioral pattern of its customers in rural areas over the years indicated that their
savings should earn higher rate of interest in addition to safety of their money. Hence, the
term deposit segment alone could be attractive for a majority of the rural populace, mostly
farmers and people engaged in petty trade and small business.

Major Components of the Project

Right from the inception of RRBs in 1975, the interest rates on term deposits were having an
edge over that of Commercial Banks and it created a legacy that the interest rates on term
deposits of RRBs are competitive. Thus, the bank inclined to retain the edge in interest rates
to have a practical approach in evolving its strategy growth in deposits of the bank in respect
of the different maturity periods were studied based on the historical data and also behavioral
pattern of renewal of retail deposits.
Initial studies indicated that deposits of the bank are found attractive in two slabs, i.e., (i) 46
days (ii) One Year. However, the data analysis further indicated clues that 180 days slab is
also likely to garner more deposits provided the interest rate under that slab is made more
attractive in comparison to that offered by other banks in the area of operation In the light of
the above analysis, a new scheme titled Sankranthi Special Deposit Scheme with the
following features was launched: (i) 180 days deposit (ii) 9.25 per cent rate of interest
(increased by 0.50 per cent offered hitherto) for retail and maximum of 0.50 per cent
additional rate for bulk deposits (iii) Close ended scheme.

Tags: #Chaitanya Godavari Grameena Bank #Economic Value Add #Business or ICTbased Innovation #Financial Inclusion #Skoch Financial Inclusion & Deepening Award
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