The Hindu Business Line : Indian Bank plans new products to increase business volumes

INDIAN Bank proposes to launch several new services and products to significantly increase business volume as well as profitability, even while it eyes an annual growth of at least 20 per cent. The bank has a network of 1,389 branches and 266 ATMs.

As part of this new strategy, the bank plans to revive its merchant-banking subsidiary — IndBank Merchant Banking Services, according to Indian Bank Executive Director, Mr B. Sambamurthy.

The bank wants to leverage its strong customer-base of around 24 lakh in 283 branches, which have implemented core banking solution.

"With CBS, we have the track record of 24 lakh customers readily available with us. Even if we find 10 per cent of them with good track record, we can sell products to 2.4 lakh customers immediately," he told Business Line.

The bank has already launched a global credit card and cash management services. It now proposes to offer capital market services by reviving its merchant banking operations.

It also plans to enter insurance brokerage business by acquiring a minor stake in PNB Principal.

The bank is comfortable with a capital adequacy ratio at around 14 per cent to meet business growth at around 20 per cent per annum, after ploughing back profits.

Stating that the bank has no immediate plans for an initial public offer, he said it might consider raising about Rs 60 crore through tier-II issue or new hybrid instruments proposed by RBI.

Thanks to the booming real estate market and the Securitisation Act, the bank could successfully sell attached properties to recover over Rs 300 crore.

The bank has joined the `under one per cent club' for net NPAs, which currently stand at 0.9 per cent, he said.

In a bid to contain fresh NPAs, the bank has adopted a fundamental change in risk management systems, in line with the best international practices.

According to Mr Sambamurthy, the change would effectively address the conflict of interests in branch managers. In an attempt to meet targets, branch managers inadvertently overlook risk management.

To address this, Indian Bank has decided to relieve its branch managers from the responsibilities of loan appraisal and risk management, while asking them to focus only on sourcing loan proposals.

"We are already finding a significant improvement in quality of loan portfolio."

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