As part of its wealth management initiative, Bank of Baroda (BoB) will venture into mutual fund business very soon. Bank of Baroda Asset Management Company, a subsidiary of the BoB in collaoration with the Italian company 'Pioneer' will form a joint venture for mutual fund business.
"The memorandum of understanding (MOU) has been signed and the details are being worked out", V Santhanaraman the Executive Director of the bank told Business Standard.
Of late mutual funds have become a major destination for investment. Sensing this, the bank has decided to make a foray into the business. As this required specialized expertise, the bank has gone for foreign tie up, he added.
"With the disposable income rising , the high salaried and professionals are evincing interest to invest in mutual funds", he said, adding that apart from easy liquidity, the MF instruments offer tax incentives which has become another cause of attraction.
According to him , various mutual fund products catering to different segments of people will be developed by Pioneer and the marketing of the products will be made by Bank of Baroda Asset Management Company.
The bank is betting big on this venture and expects to be among the top five within next five years. Besides, as part of diversification plan the bank will venture into the life insurance business very soon.
For this, it tying up with London based Legal and General. "A joint company will be formed with 26 percent equity participation by Legal and General", he said.
The remaining equity will be held by the Bank of Boroda, Andhra Bank and some other institutions which are to be finalized yet, Santhanaraman added.
The bank at present has 2732 branches across the country and plans to add 150 more branches and 120 offsite ATMs soon. About 31 branches are to be opened by end of July.
In Orissa the bank will open 7 more branches during the current fiscal to take the total to 49 from 42 at present. While two more branches will be opened very shortly, the bank has applied for license for the remaining 5 branches. Importantly, 25 of the bank's 42 branches in the state will be under the Core Banking Solution (CBS).
At the national level, while 80 percent of the current business is covered through CBS branches, it is likely to go up to 90 percent by March 2008.
Further, to meet the rising credit requirements of the Small and Medium Enterprises, the bank has come out with the concept of SME loan factory. The credit requirement beyond Rs.25 lakh will be provided by this outlet.
The bank has 15 such factories in the country and plans to add 16 more during the current fiscal including one in Bhubaneswar.
Bhubanesswar SME factory is likely to come up before December 2007, he announced. Besides, within next 4-5 months Baroda Vikas Sansthan (BVS), the training institute for self employment, will be functional in Orissa.
Currently, the bank is at the fourth position among PSU banks in terms of profit and third largest in terms of business. However, it aims to be number one by 2010-11.It expects the product and processes to drive its growth. However, maximum stress will be given on the customer satisfaction, the executive director said.
It may be noted, the bank achieved a business of Rs 2, 09,000 crore by March 2007 with Orissa business contributing Rs 1413 crore. Orissa has emerged as a major growth centre in the east and the bank is according top most priority to it, he said.
Source: Business Standard
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