IndusInd Bank doubled its branch network, profit and customer base over the last three years. The mid-size private sector bank’s MD & CEO Romesh Sobti hopes to repeat it in the coming three years. In an interaction with BusinessLine, Sobti talked about his bank’s loan portfolio and the need for having the right ‘ecology’ to enter infrastructure financing, among other issues. Edited excerpts:

Isn’t your loan book too concentrated on commercial vehicle (CV) loans?

I think it (CV) is a misunderstood part of our business. When we say CVs, it’s not just CVs, but anything on wheels which is from 2 to 16 wheelers. This includes heavy, small, and medium CVs, off the road vehicles and construction equipment vehicles. We have more than 2 million customers in different industries and regions. So it (the loan portfolio) is quite diversified. Secondly, within the CV portfolio, there is diversification – personal products and commercial products. Thirdly, under the retail book, earlier we were only into vehicles. Now, we are into everything including loan against property, gold loans, business banking and small business loans. Our loan portfolio of non-vehicle retail is worth ₹7,000-8,000 crore, and will be about ₹12,000 crore by the end of the current fiscal and ₹20,000 crore next year.

Will you get into project financing?

Financing infrastructure will always remain a big potential for banks in India. The issue earlier was the asset-liability mismatch and there still is. But now, I can do infrastructure bonds and to that extent, the mismatch has been mitigated. Taking risk is another feature. One is the ability to take risk and the other is the willingness to take risks. When the whole infrastructure ecology is restored and comes on a stable footing, we will come into the picture. But it (infrastructure loans) will never be a large part of our book, maybe about 15 per cent. The size of the pool is huge but it is the willingness to take risks (which isn’t there).

On the RBI allowing banks to raise resources through infrastructure bonds, the question is of the timing and there is a cost to it. The market is going to develop and we will watch it right now. It’s too nascent and the pricing will stabilise.

Recently, you cut interest rate on savings deposits below ₹1 lakh. What is the rationale?

We raised deposit rates three years ago, when the rates were deregulated. There are slabs of up to ₹1 lakh and below ₹1 lakh. A lot of water has flown under the bridge in the last three years. From 250 branches then, our network has expanded to 650 now.

Secondly, we have an entire suite of retail products and our cross-sell has improved. So, people in both slabs have bought other products too.

Therefore, there is more loyalty in the customer base now. So for those in the up to ₹1 lakh deposit slab, there is an incentive to upgrade to the higher interest rate slab. So that is the rationale behind it.

Recently, the RBI put a limit on the number of ATM transactions. Will you charge your customers if they cross the limit of 5 transactions at IndusInd Bank ATMs?

It’s not a big hardship for customers (to limit the number of transactions). They just have to manage their cash better to avoid transactions beyond five (at their own bank ATMs) and three (at non-bank ATMs). I cannot draw money daily for my expenses. We will fall in line with the market and follow other banks on charging own customers. Clearly, it is a cost to us and hence, it makes economic sense to charge.

What are your expansion and growth plans?

We doubled our branch network, profit and customer base (over the last three years). Going forward, we can do that again. We always have three-year plans.

So, our branch network will double from 600 to 1,200 by 2017. Our ATM to branch ratio is typically 2.5:1 and we want to maintain that. We hope to increase our customer base from 4.5 million to 9 million. Our profits have grown about 25 per cent every year and hope to continue.

Your term as MD and CEO is due to end next year. You can still be at the bank’s helm for six more years. Have you heard from your Board?

I have openly said that if the Board invites me, I am ready to continue.

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