Indian Bank expects to recover Rs 8,000 crore worth of non-performing assets (NPA) this financial year, managing director Shanti Lal Jain said in an exclusive interview with Moneycontrol. The state-owned bank has already recovered Rs 4,272 crore so far this year, he said on November 7.
Jain said the lender has the Reserve Bank of India’s (RBI) approval to set up a back-office operation subsidiary. Edited excerpts:
What is the outlook on loan recovery?
At the beginning of FY24, we set a recovery target of Rs 8,000 crore, out of which we have already achieved Rs 4,272 crore, which is more than 50 percent. The rest we expect to achieve by end of this financial year.
On average, this works out to Rs 2,000 crore per quarter. So we are a little bit higher… my recovery will be more than my slippages.
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What is your guidance on credit growth for this financial year?
On the credit side, we will grow between 10 and 12 percent. We are interested in profitable growth, which means good asset quality margins. We are growing in a very prudent way... This quarter, retail has grown 14 percent and agriculture has grown 16 percent. In housing loans, it was 36 percent and gold has grown by 28 percent or so.
On the deposit side, we could maintain our CASA (current and savings accounts) of 41 percent (share of total deposits).
Our NII (net interest income) has grown 23 percent (YoY) because we could contain our costs. I see that the NII will likely grow in the same way we are growing. So credit costs, my net NPA has come down to 0.6 percent, and credit costs naturally will be less than this.
Could you throw some light on expansion plans?
We will be growing both physical and digital. In mobile banking, we are giving a number of services and mobile customers can transact 24x7. But at the same time, we are serving all segments of society and the whole country. We remain focussed on physical also.
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What is the latest update on the launch of the operational subsidiary?
So, we have got permission from the Reserve Bank of India. We have hired a consultant. We are now approaching the RBI for permission to start operations. This will be a new company and will do the back-office operations and we expect this to go on stream in another six months.
Initially, we may recruit some more people and this organisation will require a separate chairman and CEO. Once RBI’s green signal is secured, we will go to the Registrar of Companies to get the name of the company approved. We have suggested three to four names for the proposed operational subsidiary.
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