Indian Bank is set to bounce back. Reassuring its customers that the bank will, from now on, support and grow with them, Managing Director and Chief Executive Kishor Kharat, who was in Coimbatore with the bank’s top management team to celebrate the lender’s 111th Foundation Day, categorically said that “Indian Bank will not lose its identity”. Excerpts from an interview:

You have reassured your customers that the bank will not lose its identity. How sure are you on this?

Well, it is the government’s prerogative. There are lots of news floating in the market, and everyone is trying to guess the bank that will be targeted next. Repeated feelers indicate that big banks might take over any weak bank.

So, from that angle, if a big bank is to be considered an anchor bank, Indian Bank is neither a ‘big’ bank nor a ‘weak’ one. I, therefore, think we will be out of this zone — the zone of consideration for absorption.

Are you looking to acquire a small bank to grow from ‘good’ to ‘great’?

‘Good’ is a great exercise, but it is not about the volume of business, rather qualitative growth.

We are in the process of ushering in customer-centric growth, and for this, have identified five focus areas — enhancing business parameters, customer services, asset quality, digitisation and operational efficiency. The process has started and the plan approved.

The bank was on an internal consolidation mode. Business had remained sluggish over the last 10 years because of the happenings in the past. We are just coming out of the sluggish phase. Our financials have improved and we are targeting to grow with the industry

Our growth over the past five years was well below the industry average, at less than 2 per cent. We have created enablers and are well on the growth path.

What kind of growth has Indian Bank registered since your assuming office in April?

We have sanctioned credit proposals worth ₹17,000 crore in the past two months (June, July). This has not happened in the last 10 years.

Internally, our management has approved a plan to take the business level to ₹3.60 lakh crore by March 2018. Our total business had touched ₹3.14 lakh crore at the end of last fiscal. We are looking to add ₹46,000-crore new business. This will translate to 14 per cent growth (from 2 per cent to 14 per cent in one year)

What is your strategy for achieving the growth target?

We will focus on MSMEs, agricultural advances and retail.

We have identified 73 high-potential branches for MSME business, introduced 28 activity clusters across the country for approaching MSME clients and created specialised MSME Centralised Processing Centres (CPCs). There are 18 MSME CPCs. We plan to double this to around 40 in one year.

In retail, we will follow a similar pattern. We have so far opened 38 retail processing centres, and these centres have helped our branches get more business, particularly from the housing segment. We have undertaken approval of various projects from good builders; particularly, after the introduction of RERA, financing through builders has become much safer for banks. We have also tied-up with dealers for vehicle loans.

Are you looking for capital infusion to support your growth plans?

Our capital adequacy is sufficient to take care of our needs for FY2017-18. We do not foresee the need to raise capital next year too. Tier-II capital is nil and there is enough head-room in our equity.

However, to conform with SEBI regulations, the bank is required to bring down government holding to 75 per cent from 82 per cent by March 2019. Hence, we may have to raise capital to dilute government’s stake by 7.5 per cent. Both the board and the shareholders have given the nod for issue of 4.75 crore fresh shares.

We will study the market potential and look for an opportune time to hit the market.

Your rate of interest on deposits of over ₹1 crore is showing a tendency to slide after 12 months and beyond. Are you trying to dissuade acceptance of bulk deposits beyond a year?

Our focus is on low-cost CASA (current account, savings account) deposits. Our deposit growth, which was negative earlier, has grown 8 per cent in Q1. We have created a separate cell in Delhi to focus on institutional and government business and this has started paying off. We expect to grow the deposits by more than 12 per cent this fiscal (from negative) and credit by 12 to 14 per cent. Credit growth will be slightly higher than deposit growth because we are required to improve our CD (credit-deposit) ratio. All along, because we were not lending, the bank was using the surplus funds for deploying through treasury.

We made good money through sale of investments because we were holding excess SLR (Statutory Liquidity Ratio). Our average return on investment was 6.5 per cent. Now that we have started lending, this will help improve Net Interest Margin (NIM).

We hope to push NIM from 2.73 per cent to around 2.85 per cent by March 2018 and 3 per cent by September next.

Return on Assets is 0.67 per cent now. This is expected to be pushed to 0.80 per cent by the end of this fiscal and to 1 per cent by September 2018; and Earnings Per Share (EPS) from 10.1 per cent to over 12 per cent.

We have internally decided to increase the Provision Coverage Ratio to over 65 per cent, because the Centre has said that if we want to give ESOP to our employees, it should be over this limit.

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