The recap funds will be routed to the bank in the form of government of India bonds and will earn the bank an interest of 10 per cent per annum apart from significantly improving the Tier-I capital. The bank has received Rs 1,850 crore by way of recapitalisation since it went down on the weight of its non-performing assets (NPAs) a few years ago.

Recapitalisation comes at a time when the bank has managed to post an operating profit for the first time in many years. For fiscal 1999-2000, it has posted an operating profit of Rs 23.86 crore compared to an operating loss of Rs 163.24 crore in the previous fiscal. However, net loss was still Rs 426.97 crore (Rs 778.49 crore) mainly on account of provisioning of Rs 450.82 crore (Rs 615.26 crore). The provisioning includes fresh NPAs of about Rs 40 crore, Rs 74 crore towards its subsidiary (Indbank Mutual Funds), salary arrears (Rs 40 crore) and old NPAs.

The bank, according to Ranjana Kumar, is likely to double its operating profit next year and post net profit by March 2002. Indian Bank has accumulated losses to the tune of Rs 3,608.85 crore as of March 2000.

The deposits of the bank have increased by 11.8 per cent to Rs 19,114 crore (Rs 17,098 crore) and it plans to add another Rs 2,400 crore to the deposit base this fiscal. Domestic gross advances stood at Rs 8,510 crore (Rs 7,663 crore), an increase of 11.1 per cent. Domestic investments increased by 12 per cent to Rs 8,590 crore (Rs 7,666 crore), all of which have been marked to market.

Gross NPAs decreased by Rs 285 crore to Rs 2,835 crore (Rs 3,120 crore). Gross NPAs as a percentage of gross advances has decreased to 33.3 per cent (40.7 per cent). Net NPA to net advances was lower at 18 per cent (24.4 per cent.)

The bank's low-cost deposit account for 31.2 per cent of the total deposits and the bank plans to increase it to 34per cent. The bank also aims to recover Rs 470 crore of NPAs this fiscal and has recovered Rs 113 crore till June.

In order to turnaround the bank, a restructuring plan that covers organisational restructuring, branch and manpower rationalisation, strengthening of foreign operations, technological upgradation and hiving off the subsidiaries over the next three years has been submitted to the government. The bank will move towards a leaner organisation with three-tier structure consisting of branch, regional and head office and will dispense with zonal offices, she added. Branch strength is expected to be brought down through closures and mergers and manpower rationalised through an introduction of VRS. The bank aims to put in place a stringent risk management system with the help of external consultants.

On the technology front, the bank has drawn up an IT plan that envisages 70 per cent of the bank'sbusiness coming from computerised branches by 2001. Currently, 33.36 per cent of the total business of the bank has been computerised. Networking of branches will also be taken up with 63 branches in Chennai, to start with, interlinked under metropolitan area network. The bank also proposes to introduce internet banking in the near future.