Corporate loans must to grow bank’s loan book, says Indian Bank MD

Indian Bank MD & CEO Padmaja Chunduru

After registering a good set of numbers in the recently released second-quarter results, Indian Bank has set its sights on the next growth trajectory with plans being worked out to further improve asset quality and business growth. The Chennai-headquartered public sector lender — the anchor bank in the Allahabad Bank merger — is gearing up to make the amalgamation a smooth affair. Speaking to Sajan C Kumar, Indian Bank MD & CEO Padmaja Chunduru shared her views on the efforts being put in and the road ahead. Excerpts:

You were able to arrest fresh slippages and had focussed on business growth. What were the steps taken on ground to ensure this robust result?
The numbers this quarter were good in all aspects. There had been efforts for achieving this. During the previous quarters, if one parameter was showing growth, another wasn’t picking up that much. This quarter, everything came together. Business grew by 14%, deposits and advances also grew accordingly. Though the corporate pie witnessed a slightly low growth of 6%, we expect it will pick up going forward with the revival of the economy. We are happy that the focus on earnings has kept the interest income up and other income streams have also been activated in a big way.

On the asset quality front, there seems to be some concern as gross NPA is still at 7.2%. What are your thoughts on this and measures the bank is planning to take?
I agree that 7.2% is not an ideal figure for any bank and our wish is to bring it down to as low as possible. We are putting in measures, which include recovery and upgrade of accounts. This quarter, it was only Rs 740 crore and no big account was involved. Every quarter we may have around Rs 800 crore in fresh slippages, which is normal in the current economic situation. Recovery has been to the tune of `300 crore and none of the NCLT accounts have been resolved, though we are expecting around Rs 1,500 crore this fiscal. The banks are also trying to get the NPAs recovered through steps other than NCLT as it invariably takes much longer.

It seems that the RAM sector’s advances are growing aggressively. Is there any plans to step up corporate lending?
The whole loan book is growing, so is the corporate pie. You see, corporate still occupies around 40% of the book, while RAM (retail, agriculture and MSME) accounts for 60%, which means, each vertical gets only around 20%. Corporate will be the growth engine as you can’t grow with RAM sector lending alone. I am not much stuck with the ratio, whether it is 60:40 or 50:50. Tomorrow, if a good company approaches us with a request of Rs 2,000 crore and if it is triple ‘AAA’ rated or into manufacturing, we are prepared to do that. The only difference now is that given the bad experience in the past, PSBs have tightened the due diligence and analysis processes. A lot of mechanisms have been put in to study the corporate group. Also, we have concentrated the process of corporate loans of above Rs 100 crore in three corporate branches, one each in Kolkata, Delhi and Mumbai. There are some other corporate branches in places such as Hyderabad, Bengaluru and Coimbatore, and we are opening some more.

What is the update on the Indian Bank- Allahabad Bank merger? What are the challenges or opportunities you see?
Two Town Hall meetings have been organised in Chennai and Vijayawada to primarily educate employees and customers about the merger process and its benefits. Now, we are proceeding with other due processes, including legal and tax-related. As Indian Bank is predominantly south-based, the merger with Allahabad Bank will give it an opportunity to grow on a pan-India basis. The merger will take the Indian Bank to the next level, with the size of the merged entity getting almost doubled. Larger the size, better the strength. Yes, there will be challenges but there will also be the strength to withstand those challenges. You can give bigger loans and reach out to more corporates. Suddenly, my business doubles. I see a huge opportunity.

How was the feedback received at the recent customer outreach programmes? Has it really helped in pumping in money for customers to spend?
To a certain extent, yes. The government thought an impression was created among the people that the banks were not lending. The outreach programme was to convey the message that the banks’ doors are open. Not only the PSBs but the private lenders as well as NBFCs participated in the event, helping it achieve its purpose.