The Hindu Business Line : Indian Bank evaluating options for consolidation

AIMED at inorganic growth for achieving the targets on business volumes, Indian Bank is currently evaluating certain options for consolidation and has identified 2-3 institutions in this connection, said the bank's Chairman and Managing Director, Mr M.B.N. Rao.

Addressing reporters here on Saturday, Mr Rao said that Indian Bank expects the process to be completed in the next 12 months. He said the bank would simultaneously work on its public issue during this period.

Mr Rao said the entities include both public and private sector institutions and the consolidation might even take place among public and private entities.

However, terming the status of this consolidation process as "too premature," he said, "size, reach and synergies will ultimately decide the consolidation of entities."

He assured that the interests of all the stakeholders — employees, shareholders and customers — would be taken care of in the consolidation process.

In fact, the consolidation will result in value addition and economies of scale. Allaying the apprehensions of the employees over the retrenchment and closure of branches on account of consolidation, Mr Rao said only 36 per cent of the Indian households were currently being accessed by the banking industry and there was large scope to reach out to the people.

"The overlap of branches need not result in closing down the branches. It will be a case of closing down branches in certain locations and opening them at new locations.

"Further, the number of jobs on account of consolidation of banks will not fall sharply," he said.

Stating that the bank is now quite comfortable with its capital adequacy ratio at 14.58 per cent, he said it needs to augment its CAR, once the Basel-II norms come into effect from April.

"As we are simultaneously working on consolidation and public issue, the issue size will depend on which one would take place first. If the consolidation takes place first, then the public issue size will be more," Mr Rao said.