Vijayalakshmi Iyer: Bank of India's saviour?

Bank of India had made rapid strides to replace Punjab National Bank as the country's second largest nationalised bank.

Of late the public sector bank seems to be struggling. Its asset quality has come under pressure and it is losing business to peers like Bank of Baroda.

Restoring the bank to its former glory will be the top priority for Vijayalakshmi Iyer, the seasoned banker who took over as chairperson and managing director of the Mumbai-based bank last month.

Iyer, who started her banking career with Union Bank of India in 1975, has rich experience in both branch banking and formulating boardroom strategies.

In Union Bank, she worked for over 12 years as a field officer and nine years in large branches before being assigned the task of setting up the bank's risk management department in 2000.

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Iyer contributed significantly in that role by setting up a structured organisation, putting in place various risk management policies, developing measures to quantify the various risks faced by corporation in the retail, NBFCs and banking sectors, and also structuring the reporting framework.

Prior to joining Bank of India in November, she was the executive director at Central Bank of India, where she spearheaded the completion of core banking solution and rolled out alternative delivery channels and other key initiatives to bring the bank's technology platform on a par with the other public sector banks.

During her stint, the bank witnessed significant improvement in credit administration, treasury and investment and risk management.

 In Bank of India, Iyer's primary focus will be to contain non-performing assets, which have increased from 2.56 per cent of gross advances in June to 3.42 per cent in September. The gross NPA was 3.02 per cent on September 2011.

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Controlling slippages will be another area of focus for her as it will increase the bank's profitability by reducing the provisioning burden.

Profit of the bank plunged 38.5 per cent in the second quarter to Rs 300 crore from Rs 490 crore during the same period of the previous year due to a massive increase in provisioning.

Iyer's appointment as chairperson and managing director of Bank of India has been a break from the tradition of lateral hiring followed by the government until now.

All the recent appointments in Bank of India have been lateral, that is, the chairman of a smaller bank was picked up as its chairman. Iyer is an exception as she was promoted from executive director, Central Bank of India, to chairman Bank of India.