Indian Bank targeting 20% growth this fiscal

Indian Bank is eyeing a 20% growth in business to over Rs1,80,000 crore by March 2011. It plans to open 190 branches in the current fiscal and is seeking a presence in Maldives. The bank’s chairman and managing director T M Bhasin shares his growth plans with DNA. Excerpts:

What are your growth targets for FY11?
Our business grew 21.28% during 2009-10 to Rs 1,50,886 crore. Growth in deposits and credit was 21.56% and 20.89%, respectively. The bank will maintain the growth momentum during the current year. We are targeting a growth of around 20% in business so as to cross Rs 1,80,000 crore by March 2011.

What will be the focus areas for loan growth in FY11?
Agriculture, micro-small enterprises, priority sector are the niche area of the bank. Additional focus would be on infrastructure, power, telecom, trade finance, services sectors like health. The bank will maintain the credit growth momentum in the current year as well.

You earlier said that Indian Bank is focussing on achieving zero net NPA and 0.5% gross NPA in two years. Is this a realistic target?
The provisioning coverage ratio for the bank as on March 31, 2010 is 93.65%. The bank is providing 100% provisions for doubtful assets as against the required provision of 20% to 50% depending upon the age of the secured portion of the assets. The provision retrieved through NPA recovery will be utilised for making higher provisioning for NPAs. The present level of gross NPA stands at 0.81%. The credit monitoring department is monitoring all advances closely, which will help contain slippage of assets into NPA category. Through these measures, we are hopeful of achieving 0.50% gross NPA level.

How are you calculating your base rate? What is it likely to be?
The base rate and methodology for working will be announced close to July 1, which is the date of implementation of the base rate as per the RBI circular.

Which are the unbanked areas where Indian Bank is the lead bank and how do you plan to cover them? Does it put your costs under pressure?
Indian Bank holds State Level Bankers Committee responsibility in Union Territory of Puducherry and lead bank role in 13 districts (10 in Tamil Nadu, 2 in Andhra Pradesh and 1 in Kerala). There are 2863 unbanked villages in these districts and union territories of Puducherry. Of these, 917 villages have been allotted to Indian Bank for financial inclusion.

A detailed household survey is underway to assess the potential available for savings and credit linkage. We are looking at this as an emerging opportunity for business growth. The implementation of core banking solutions and subsequent leveraging of technology would not put pressure on costs.

How many branches do you currently have? How many more will you have by the end of FY11?
We had 1,756 branches in India as on March 31, 2010, apart from one branch each in Singapore and Colombo. We are planning to open 190 more branches during the current year. We are also planning to increase our presence in Sri Lanka (at Jaffna) and enter Maldives.

Will you outsource the installation and maintenance services for automated branches to a third party?
The bank has already implemented core banking solution in all branches. So, the additional investment required would be with regards to the branch ambience, ATMs, necessary hardware and software etc. The installation and maintenance service will be outsourced.