‘We are adequately capitalised’
A highly profitable bank, Indian Bank hopes to grow its balance sheet to Rs 5 lakh crore by 2015. TM Bhasin, CMD, tells Geeta Nair that the bank is innovating to attract and retain customers.
How has has the bank managed the turnaround to do consistently well in the last few years?
We have seen strong support from the government and the central bank and that helped us out of trouble. Today, our gross NPAs are less than 1.6 % while the net NPAs are 0.5%, which is globally accepted. In June last year, the net NPAs were at 0.8%, so we have clearly recovered. Moreover, we’re growing profitably with a 12% rise in profits so far this year. We have 85% provisioning.
Are you looking for more support from government?
Not really because we’re ploughing back our profits; this year till date we have achieved Rs 1,275 crore in net profits. Moreover we are adequately capitalised with the Tier I CAR at 9.67%, among the healthiest in the industry. Today, the government holds 80%in the bank and we’re doing an FPO, issuing 10% equity. There is Rs 6,000 crore headroom available in Tier II capital.
Where do you see Indian Bank in the next few years?
We hope to have a balance sheet size of Rs 5 lakh crore by 2015, a net profit of Rs 5,000 crore, 2,500 branches and a 25,000-strong workforce.
We want to increase both fee-based income as also non-interest income. The RBI Governor D Subbarao has said that banks need to reduce interest margins, raise deposit rates and reduce lending rates. The target is to take non-interest income from 11% to 13% of total income by 2012 and to 15% by 2015. We feel this is achievable.
We also want to grow our loan syndication business and since the launch of the loan syndication desk we have cleared 23 proposals in 2010-11 for Rs 26 crore.
We appraise large projects and earn commissions. We are looking more at non- fund-based opportunities since they give us instant income. We also have the insurance tie- up with HDFC Standard Life and last year we did Rs 25 crore commission from premium and are hoping to do Rs 40 crore this year. We are looking to grow the fund management, home loans and merchant banking spaces.
How do you plan to grow