Public sector lender, Indian Overseas Bank (IOB), has embarked on digital banking initiatives with an estimated spend of about ₹1,400 crore, while it will also be hiring about 450 people as restrictions have been eased for the Chennai-headquartered bank to drive future growth.

Support from Govt

The bank faced many restrictions imposed upon it by RBI after it was brought under ‘prompt corrective action’ (PCA) in September 2015 due to a huge surge in NPAs on account of various factors. Gradually, the bank reduced its NPAs and improved its capital adequacy ratio above required levels. The Centre also supported it with a capital infusion of ₹24,074 crore during FY18-FY22 through recapitalisation bonds.

Sustained performance

After incurring losses for 18 quarters, it came into the black in March 2020 quarter, driven by a reduction in legacy stressed assets. Since then, it has been generating profits consistently, while other parameters also improved. with sustained good performance, IOB came out of the PCA framework in September 2021, and restrictions were eased.

“We have come a long way. In the past couple of years, we gain the confidence of all stakeholders and staff morale turned positive,” Partha Pratim Sengupta, MD and CEO of the bank, told businessline. Acknowledging the efforts of his predecessors, he said, “We added more measures.”

High budget, new vision

The bank has now embarked on digital technology initiatives “with a very high budget of about ₹1,400 crore” for the next three years, he said. He explained that the IT spend is in tune with its new vision of “emerging as the preferred bank connecting generations with high standards of ethics and governance.”

It is setting up an analytics team, which will use machine learning and artificial intelligence to help borrowers choose the right product. It is also setting up a digital hub, while loan processes will go fully digital.

Hiring up

After coming out of PCA, IOB resumed recruitments to support future growth. It has already hired 465 officers and 200 other staff. This year it is planning to recruit 450 staff and officers. As of March 31, 2022, it had a total staff strength of 22,369.

Ease of restrictions also helped the Bank restore benefits and other facilities to the staff. “Some improvements have been made for pensioners also. We are now offering benefits like any other bank. Overall, the staff morale is very high now,” he said.

Sengupta expressed optimism over IOB’s future growth curve. The loan book is well-diversified and secular now, while some concerns remain in the education loan books. “Maybe for one or two quarters, there could be the same rate of slippages, but it will come down,” he added.

Outlook for H2-FY23

Presenting the outlook for the second half of this fiscal, Sengupta said there could be some moderation in credit growth when compared with H1-Fy23. Net advances stood at ₹1.6 lakh crore as of September 30, 2022, as against ₹1.3 lakh crore in the year-ago period.

On NSE today, the IOB share closed at ₹32.75, 65 paise lower than the previous close.