Kulangara Paulo Hormis was born in Mookkannoor, a village near Ernakulam, Kerala, into a traditional agricultural family. He diligently pursued a career as an Advocate at the Munisiff Court of Perumbavoor, Kerala, but aspired to help the poor. At the same time, Travancore Federal Bank Limited, which had an agricultural focus, was nearing bankruptcy. Given his agricultural roots, KP Hormis decided to revive the bank. In 1944, he left his legal profession and took control of the bank.
After acquiring a controlling stake, Hormis increased the share capital from Rs 5000 to 71,000 and relocated the bank from Nedumpuram to its first branch in Aluva, Kerala, renaming it Federal Bank in 1945. During Hormis’s tenure, Kuries (chit funds) became popular in Kerala’s banking sector. These funds allowed bidders to participate with a 50% discount and receive official transaction receipts. After Federal Bank received its banking license in 1949, Hormis started issuing Kuries to farmers.
The strategy succeeded, leading Federal Bank to expand to three branches in Kerala. Hormis also acquired defunct banks that had defaulted on Kuries. By 1968, he had acquired five banks: Chalakudy, Cochin Union, Marthandom, St. George Union, and The Alleppey Bank.
By 1970, Federal Bank had become a Scheduled commercial bank, focusing on foreign exchange payments and opening its first office in Mumbai. The bank expanded beyond Kerala, growing to 276 branches in India, with its share capital increasing tenfold to 1 CR by 1977.
After surpassing 1000 CR in deposits, Federal Bank raised 28 CR from an IPO that was oversubscribed by 60 times. It launched its lending business and became the second-largest private bank, with 360 branches. Impressively, all its branches were digitalized using its software, Fedsoft.
By March 2009, Federal Bank had expanded to over 600 branches and achieved a total business volume of 50,000 CR. In 2013, it became the first bank to launch an electronic passbook, Fedbook.
Growing at a rate of 19.27% annually, Federal Bank surpassed 100,000 CR in deposits and 200,000 CR in total business by 2018, reaching a business volume of 274,558 CR by March 2020.
➡️ Today, Federal Bank operates 1656 branches across 32 states and UTs in India, with a net income of 9710 CR and a valuation of 40,000 CR, making it the 21st largest bank in India.
From reviving a failing bank to scaling it to a valuation of 40,000 CR, KP Hormis’s journey is truly inspirational.