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R S Isabella is Managing Director of Repco Bank and Repco Micro Finance Ltd and a Director in Repco Home Finance Ltd. This socially conscious entrepreneurial-banker is well-poised to scale greater heights!

Repco Bank, with its unique constitution and mission, is a cooperative bank that comes under the Union Home Ministry. Repco Micro Finance comes under the Reserve Bank and Home Finance under the National Housing Bank! All three institutions are flourishing with excellent performance.

Repco Bank, founded in 1969, is in its golden jubilee year. The bank has been a consistently good performer earning profits and declaring dividends. For the year ended 31 March 2019, it had a total business of Rs 15,230 crore with Rs 8727 crore of deposits and Rs 6503 crore of advances. With a 75 per cent credit-deposit ratio, the funds were deployed efficiently. Profit after tax for the year was Rs 107 crore. The net non-performing assets were low at 1.48 per cent.

Isabella had a brilliant academic record. A topper in HSC and a gold medallist in B.Com. She holds a master’s in bank management and brings with her 26 years of experience in banking, with 20 of these at Repco. She described Repco Bank as a unique kind of bank: “it was started primarily with the objective of rehabilitation of repatriates from Sri Lanka and Myanmar, settled in India. The repatriates were placed in special camps. To provide them a living, the Home Ministry set up this financial institution. The initial effort was to provide some grants for the construction of dwelling units (huts) and in course of time for employment..”

The flow of repatriates stopped by the mid-1980s. By then, these have settled in the southern states, mostly Andhra Pradesh, Tamil Nadu, Kerala, and Karnataka. The southern governments along with the Centre provided the capital to the financial institution.

Isabella estimated the number of repatriates enrolled with the financial institution at around 71,000 and it is declining. These have received priority treatment in terms of special loan schemes and a lower rate of interest. Only the first generation of the repatriates are treated as repatriates; in 10-15 years down the line, there will be no repatriates left as per the present norms.

The institution started transacting with the general public from the mid-1980s. Repco has been functioning as a regular bank with attractive deposit and loan schemes. The prospects for the bank emerging a full-fledged, scheduled commercial bank appear bright.

In the present scheme of merging banks to build size and volume of business, is there much latitude for small banks for continued growth?

Isabella is confident in the role of small banks. She points to RBI’s differential licensing that permits licensing small finance banks that specialize in retail lending to small borrowers and microfinance institutions: “even large banks are increasingly trying to tap the retail segment. We have strengths in this segment and also in rural and priority sector lending. Specialized banks and financial inclusion can be taken care of better by smaller banks,” she said.

The two institutions promoted by Repco Bank –Repco Home Finance Ltd (RHFL) and Repco Microfinance Ltd (RMFL) – have also been doing well. Formed as a listed company in 2000, RHFL has emerged among the top ten housing finance companies with its operations spread pan-India. At the end of March 2019, the company had a business of Rs 11,037 crore with 144 branches and 929 employees.

Magic of microfinance…

RMFL extends loans to economically backward women through women self-help groups (SHGs) for income generation activities. Spread across Tamil Nadu, RMFL benefits around 80,000 SHGs with member borrowers numbering around 4 lakh. Total outstanding advances at the end of March 2019 were Rs 907 crore.
Isabella said that the culture of repayment at RMFL, with recovery at around 99 per cent, is even better compared to banks. “In this kind of joint lending, you have the peer pressure to ensure every member is conforming to agreed repayment norms. Women who are underprivileged and were in the clutches of moneylenders have been brought into formal banking. There are a sound credit rating system and the avoidance of access to multiple lending. A lot of care is also invested in forming the groups and on their education and training,” said Isabella.

Repco’s thus appears a fascinating growth story: starting as an institution to help repatriates, it has evolved as an effective, profitable group of institutions impacting positively on thousands of less privileged sections of society. The outreach to SHGs appears most impressive. The coming years appear to hold even greater promises in all three lines of activities.

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