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From Tehelka Magazine, Vol 7, Issue 06, Dated February 13, 2010

Totally Out Of Africa

The quarter-century-old Indo-Zambia Bank is a trendsetter across the continent, reports DEVIRUPA MITRA from Lusaka

Survivor The bank has survived a number of crises, including the recent recession
Linking cultures The bank employs 260 locals and 10 Indians

ON THE ground floor of a squat building in downtown Lusaka, Zambia’s capital, tellers sit inside tiny wooden cabins, counting out money. Welcome to the Indo-Zambia Bank, which came into being after three Indian state banks and the Zambian government joined forces in 1984. Its 57-year-old Managing Director, Satish Shukla, describes it as a “joint venture of four cultures”. The first of its kind, the bank was set up after the Bank of India, Bank of Baroda and Central Bank of India came together on an overseas platform, each contributing 20 percent towards the share capital. The Zambian government held the rest.

The bank came into existence during the heyday of the Non-Aligned Movement, when Zambia’s Kenneth Kaunda and the late Indira Gandhi were propounding South-South cooperation. Now, 25 years on, the bank is still thriving, with 12 branches, 260 local employees, nine Indian chief managers, one Indian managing director and a Zambian chairperson on board.

Fluorescent lights illuminate the high-ceiling hall, which is filled with employees working at desks piled with files, while the local clients sit on recessed window seats, patiently awaiting their turn in a queue.

The bank has had its share of troubles, such as during the 1995-97 banking crisis when eight banks folded up. But this one survived. Its secret, according to Shukla, is: “We run it in typical conservative Indian fashion.”

Though the global recession did not impact Zambia in the last two years because of the size of its economy, it went through some pretty turbulent times in 2008 due to the sharp drop in the price of copper — the country’s life blood.

With profitability under strain, plans to open new branches were shelved for 2009-10. But now that the crisis is nearly over, they have been revived. Says Shukla: “We have been pretty aggressive in expanding credit. In the last three years, credit has grown by 50 percent, deposits have grown by 30 percent and capital adequacy ratio is 40 percent.” The current total deposits are 679,764 million Kvacha (Rs 679.76 crore).


The Indo-Zambia Bank is said to have among the lowest proportion of gross non-performing assets (NPA) to gross advance among Zambian banks. “Here, the banking sector NPA to gross advances is 13 percent, which has in fact increased from eight percent two years ago. Ours is less than one percent. I think it is the best rate among the banks in Africa,” asserts Shukla, who has been with the bank since September 2008.

The spiralling NPA in the Zambian banking industry occured because of indiscriminate disbursals of personal loans. “They would even be giving away loans sitting in malls. And here if you lose your job it becomes difficult to repay loans,” explains Shukla.

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From Tehelka Magazine, Vol 7, Issue 06, Dated February 13, 2010

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