Vijayalakshmi R Iyer will complete two years as BoI’s Chairperson on November 5th 2014. Her impressive risk-management abilities have seen the Mumbai headquartered lender emerge from the NPA challenge without getting mortally wounded. At the same time, VR Iyer has not compromised on credit growth at this leading PSU bank. If the economy improves from now on, she will have a much better third year in office to report.
It has been seven quarters since Vijayalakshmi R Iyer took charge as Chairperson & Managing Director of Bank of India, and the numbers speak about a unique leadership story.
Total income has been moving up consistently even on a QoQ basis, and net profit too has been growing after a brief lull in December 13 and March 14 quarters.
But that hasn’t been this Chairperson’s greatest achievement, which has to do with how she has managed risk at the PSU lender. Like all such banks, BoI too was troubled with NPAs.
And there were analysts who thought that the Mumbai based lender would end up in more trouble than its peers, due to a disturbing NPA episode in 2009-10 period that lasted many quarters and saw BoI’s balance sheet shrinking for some time.
But this time around, the leader was different, and the main difference she brought to the table was her background in risk management. In her three-decade long career at city-based Union Bank of India she had extensive exposure in Credit Department, Credit Monitoring Department and contributed significantly in setting up the Risk Management Department.
What was once not a vary glamorous department like, say, bond trading that makes millions, Risk Management has however emerged in recent years as the most important banking skill in the NPA-plagued universe of Indian banking.
Needless to say, Bank of India, has exploited Iyer’s skills to the hilt.
Today, Iyer is looked upon as an expert in containing risk by not only by BoI, but by the entire banking industry.
However, even that hasn’t been Iyer’s core contribution in her latest stint. There are many leaders in the banking industry who manages risk in a very non-creative way - by pausing or stopping all credit growth. This is where Iyer’s abilities comes into play.
Even while containing the NPA contagion effectively, she has been growing credit aggressively. In 2014, BoI’s loan growth has been 25%, which is above industry average and is even worrying many analysts.
But the risk management expert that she is, Iyer is unperturbed. She will coolly point out the safety of her credit growth by citing the AAA rated PSUs and AAA rated NBFCs to which she has been extending credit.
According to this postgraduate in Commerce and CAIIB, the core of risk management is not to be credit averse, but to be averse to growth in risk weight of the total portfolio.
Maybe she learnt her ropes in risk management much before she became the Executive Director of Central Bank, or became the GM of Union Bank.
Widowed early in her married life, she had brought up her two tiny daughters single-handedly with none to help, except her mother-in-law, and most importantly, without sacrificing growth in her professional career.
Indeed, when it comes to VR Iyer, the ‘hand that rocks the cradle rules the world.’