Piper at the gates of dawn

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MS Sundara Rajan, chairman and managing director of Indian Bank recounts an interesting anecdote. “A while ago, I had visited Dharmapuri and met up with a few customers. They said they did not want a kadan (Tamil word for loan) but they did not mind a loan (they thought a loan to be a subsidy). I had to explain that kadan and loans were the same thing,” recollects Sundara Rajan.

The Indian Bank Ltd, the predecessor to Indian Bank was founded as a ‘Swadeshi Bank’ in the wake of widespread misery caused to depositors by the failure of M/S Arbuthnot & Co in 1906. It was incorporated the following year in March 1907 with an authorised capital of Rs 20 lakh and the bank commenced operations in August 1907. In 1969, the bank was nationalised with 13 other commercial banks.

Indian Bank has posted a growth of 39.09% in operating profit and 46.27% in net profit during the nine-month period ended December 31, 2007. Net profit for the above period stood at Rs 767.12 crore compared to Rs 524.47 crore for the corresponding period in the previous year. Net interest income improved by 19.97% to Rs 1,478.54 crore, as against Rs 1,232.15 crore for the corresponding period last year. Return on average assets have improved from 1.38% to 1.71%, while the capital adequacy ratio improved to 13.51% (including Tier I capital adequacy of 11.98%) from 12.29% as on December ‘06. “We want to be the common man’s bank,” stresses Sundara Rajan.

Further, total deposits rose by 18.07% (Rs 8,160 crore) to Rs 53,317 crore from Rs 45,157 crore in December ‘06. During the nine months, total NPA recovery stood at Rs 451.57 crore. As on December of last year, the bank’s net NPA declined to Rs 77.79 crore and constituted 0.21% of net advances, as against 0.44% in December 2006. Indian Bank is also vigorously pursuing the recovery of NPAs using the SARFAESI Act and Lok Adalat. A sum of Rs 79.98 crore has been recovered in 1,225 accounts under the SARFAESI Act during the nine months.

Says Sundara Rajan,” Priority sector lending, especially rural lending, has always been close to Indian Bank. The bank has always surpassed the targets set for agriculture lending in the previous years and would continue to be aggressive in the agriculture and SME sector.” As of date, the Bank has 11 Microsate branches for disbursing micro-finance and helping self help groups (SHGs). During the nine-month period, the bank has disbursed Rs 500 crore as credit assistance to 46,877 SHGs.

Other focus areas would be to increase its market share both in deposits and credit, improving the profitability and recovery of impaired assets. The outstanding under educational loans at the end of last year was Rs 1,049.41 crore.

Indian Bank is also planning to enter the wealth management space. “We have plans to open specialised branches for high net-worth individuals.” The bank would also be intensifying its IT penetration drive with the objective of achieving efficiency in operations and for smooth transition to Basel II norms.

At the end of last year, 1,370 branches had been brought under the ambit of core banking solutions. The bank has also developed an online smart card banking model which enables certain basic banking transactions such as cash receipts, cash payments, transfer transactions, balance enquiry, and statement of accounts.