BL interview. IDBI Bank ready for take-off at a very high speed, says Chief Sharma

We are a professionally managed new-generation private sector bank with good underwriting standards, good investment and risk management policies (which we revised when we were under the Prompt Corrective Action/ PCA framework), good corporate governance, excellent customer service, and a loyal customer base. During the period (May 2017 till March 2021) we were under PCA, none of our customers left. Our Bank is digitally savvy with advanced technology. We have young staff (average age: 36 years).

Of course, we had problems relating to high exposure to corporate loans. But, having said that, we have a good legacy of expertise in corporate advances. After we were put under PCA, we also developed expertise in retail advances.

We have been in profit for the last two financial years. The profit has been increasing. We have been able to achieve RoA (return on asset) of 1 per cent. The capital adequacy ratio is more than 19 per cent. So, we will not require capital in the next three years. Whatever (credit) growth requirement is there for the next 2-3 years can be met through internal resources. We are generating good profit that can be utilised for this purpose.

On the asset quality front, people say gross non-performing assets/ NPA level (at 16.51 per cent as at September-end 2022) is high. However, net NPA level is low at 1.15 per cent. We have excellent provisioning. We have one of the lowest cost of deposits (3.44 per cent) and low-cost current account, savings account (CASA) deposits constitute more than 56 per cent of our total deposits. So, going by these parameters and trends, our bank is on the growth path.

Earlier, our major exposure was to corporates. During the PCA period, we increased our exposure to retail advances. So, the loan book composition of retail (including structured retail -- housing loan, loan against property, auto loan, education loan and personal loan; MSME; and agriculture advances) to corporate advances changed to 65:35 as of September-end 2022 (from 43:57 as at March-end 2017). So, our business model is more capital-light (includes gold loans and letter of credit (LC)/Bank Guarantee (BG) business) and we are building a diversified portfolio. So, we are quiet hopeful that our position will improve further. The Bank is now ready for take-off at a very high speed.

For FY23, we had initially given a credit growth guidance of 10-12 per cent. But now, credit is picking up, with corporate demand also coming in, So, overall, 13-14 per cent credit growth can be sustained with existing capital and internal accruals. Our profit (net) last year was ₹2,439 crore. In H1 FY23, we have already earned a net profit of ₹1,584 crore. Our total CRAR (capital to risk-weighted assets ratio) stood at 19.48 per cent as of September-end 2022. This excludes the net profit for H1FY23. So, if we include the net profit for the first half, CRAR will be 20 per cent plus. So, we are quiet comfortable on the capital front.

Our gold loan portfolio was only ₹5,000 crore about two years back. Now, we have a portfolio of about ₹11,000 crore. NPAs are less than 0.25 per cent in this portfolio. Earlier, we were not having LC/BG business. We have started growing this business now with vendor bill discounting and supply chain financing.

We are still the lead bank in some of the cases. But going forward, we will prefer to be part of the consortium of lenders than be a lead bank. As a lead bank, we have to take the highest share in a consortium loan. Our market share is about 2-3 per cent. SBI is 15-16 times bigger than us. After consolidation, public sector banks have become bigger. Why should we take higher exposure in corporate loans than these banks? So, we should be mindful of our size. We will be guided by our credit policies relating to group and individual exposure.