Big Bull’s Favorite Bank

The legendary Rakesh Jhunjhunwala had a keen eye for hidden gems. In March 1996, his radar picked up Federal Bank, which went on to become his largest banking bet. Currently valued at around 190 INR per share, his wife, Rekha Jhunjhunwala, holds about a 2.5% stake in the bank, valued at approximately ₹1,182.9 crores today.

True to his unerring predictions, the shares of Federal Bank gained nearly 33% in the last year. 

But what did the 'Big Bull' of Dalal Street see in this fledgling bank from the south?

Of all the factors considered while investing in a company, Rakesh Jhunjhunwala believed that the most important factor in investing in a company is the quality of the management team, and his faith in Federal Bank's leadership is a testament to this. 

Let’s explore the team that has driven the bank’s growth.

Shyam Srinivasan, ex-MD & CEO

Shyam Srinivasan, who served as Federal Bank’s CEO from 2010 until last month in 2024, was one of the longest-serving leaders in Indian banking. Under his tenure, he transformed Federal Bank from a regional player into a nationally recognized brand.

Srinivasan’s commitment to technology investment year after year fueled the bank’s digital growth, making it one of India’s most advanced tech-savvy banks. He also revamped the workforce, lowering the average age from the 40s to the 30s, and increasing gender diversity—with women now representing 43% of employees.

He expanded the bank's NRI banking portfolio, pioneering technologies like blockchain to enhance remittance services and international banking for NRIs.

KVS Manian, Present - MD & CEO

Last month, Federal Bank welcomed KVS Manian as the new CEO, succeeding Shyam Srinivasan after 15 years of impactful leadership. 

Manian, a seasoned banking veteran with a reputation for driving growth, is expected to continue Federal Bank’s momentum and lead it to new heights. His experience and leadership will be crucial in steering the bank through its next phase of evolution, and his arrival is being welcomed as a key moment in the bank’s history.

Shalini Warrier, Executive Director

Shalini Warrier joined the bank as COO in 2015 and is currently serving as the Executive Director. She has played a pivotal role in enhancing customer experience and the bank’s operational efficiency. Her focus on building fintech partnerships by investing in API banking has been fruitful for the bank, increasing the number of savings accounts opened to approximately 15,000 per day, with 60% initiated through digital channels.

She also launched low-bandwidth banking applications specifically designed for areas with poor internet connectivity. These innovations allowed customers in rural regions to conduct basic banking functions such as checking balances, making transfers, and paying bills without requiring high-speed internet or smartphones. This move dramatically improved accessibility for millions of people who previously had little or no access to formal banking. 

Under her leadership, the bank has achieved significant growth in the retail banking sector and was honored as "Fintech Woman of the Year - India" at the Global Fintech Fest 2024.

Harsh Dugar, Executive Director

Harsh Dugar joined Federal Bank in 2016 as the Country Head for Corporate & Institutional Banking and is now serving as Executive Director.

Under his leadership, the bank's corporate business has flourished, boasting an impressive growth rate of 25-28%. Dugar has introduced cutting-edge digital tools and dashboards for corporate clients, transforming Federal Bank into a preferred choice for businesses. He is also championing the needs of small businesses by forging partnerships with fintech companies to streamline supply chain financing and reduce capital requirements. 

Another reason that must have appealed to the late big bull, was the bank’s financial stability and sustainable growth in recent years.

The following key factors contributed to this appeal:

• Diversified loan portfolio: Retail (50-55%), MSME (25-30%), and corporates (15-20%), thus mitigating risks
• Shock-proof balance sheet: Anchored on superior underwriting, reflecting superior asset quality (credit costs averaging <70 bps over FY11-24)
• Innovative digital platforms: Feddy (AI Powered Virtual Assistant), Fed-E-Credit (Loan against FD), 60-second Demat account opening
• Geographic expansion: In the last five years, the bank has nearly doubled its branches from 600 to 1,100

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About Federal Bank

Federal Bank Limited is an Indian private-sector bank headquartered in Aluva, Kerala. Originally founded as Travancore Federal Bank in 1931 in Nedumpuram, Kerala, the bank has grown significantly over the years. With more than 1,504 branches across India and overseas representative offices in Abu Dhabi and Dubai, it serves a large and diverse customer base of over 18.1 million people.

The bank handles nearly one-fifth of India’s total inward remittances through its extensive arrangements with over 110 banks and exchange companies globally.

With such a strong foundation, Jhunjhunwala's faith in Federal Bank seems well-placed, as the institution continues to exhibit impressive growth and financial stability.

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