Over the next two-three years, Indian Bank expects business to grow at 12-13% with retail, agriculture and MSME its primary growth engines, Managing Director Binod Kumar tells Narayanan V. Excerpts:
The bank’s business has grown 13% to Rs 14.3 lakh crore in Q3FY26. What’s your growth target for the next three years?
Although, we have guided for deposit growth of 8-10% and advances of 10-12%, we have been growing faster at
13-14%. We should grow at a compound 12-13% over the next three years. The retail, agriculture and MSME segment (RAM) will continue to be our primary growth engine, given the strong momentum in MSME lending. The RAM book, 66% of the loan portfolio, helps us diversify risk and fetches us better yields than corporate loans. It will be a focus area.
Is there any risk aversion towards corporate lending?
We are already doing a lot of infra spending and are seeing some green shoots in manufacturing. Our corporate credit growth has reached 7-8% from 1-2% earlier, despite us shedding some low-yielding assets. We are seeing good opportunities for green financing in areas like EVs, solar panels, battery storage, solar power plants. Going forward, we plan to maintain this ratio with approximately two-thirds RAM and one-third corporate. Within the corporate book, we are taking a calibrated exposure to mid-corporates where we see better yields without adding significant concentration risk.
The bank has crossed Rs 5,000 crore in operating profit for the first time. How do you plan to sustain it?
Crossing Rs 5,000 crore in operating profit in December quarter is a significant milestone for us. We are now pursuing a three-pronged approach. First, we are strengthening our CASA base, which serves as a source of low-cost funds. Second, we are focused on improving asset quality. Our net NPA ratio was already industry lowest at 0.15% as of December 2025. Third, fee income initiatives are being scaled up.
Low-cost deposit mobilisation is a challenge for the industry. How do you plan to tackle that?
It is a competitive market, but our strategy is to focus on granular, low-cost deposits rather than chase bulk money. Our CASA deposits grew 9.86% year-on-year in Q3 as we deepened customer engagement. For instance, our corporate salary account linkages brought in a good number of new accounts. To further manage costs, we are prioritising premium products and personalised services like the Virtual Banking Experience for tech-savvy users and Senior Konnect branches for the elderly. We have also overhauled our digital platforms, IndSMART and IndSMART Biz, to ensure a modern, seamless and enriched banking experience. These initiatives are driving stronger customer stickiness, improving deposit quality, and ultimately supporting CASA growth while effectively managing our cost of funds. Our CASA ratio in the December quarter was 39% and we plan to maintain it at these levels.
In a softening interest rate environment, how do you plan to protect net interest margins (NIM)?
We are strengthening our asset mix by growing higher yielding segments. Our NIM rose by 7.5% to Rs 6,896 crore in the December quarter, supported by strong advance growth. Improved asset quality, with gross NPAs falling sharply to 2.23% from 3.26% a year earlier, further boosts risk-adjusted returns. On the liability side, deposits grew 12.62% to Rs 7.90 lakh crore, helping us stabilise funding costs. Alongside this, we are accelerating fee-based income through digital transaction banking to diversify revenues. These levers together help preserve NIM even as rates soften. We can also diversify our borrowing sources to low-cost options. For instance, we raised around Rs 10,000 crore in infrastructure bonds. We also raised Rs 19,000 crore by selling InterBank Participation Certificates. We are exploring all these opportunities.
PSU banks are expected to close FY26 with a record Rs 2-lakh-crore profit. What’s driving this growth?
It is due to the better quality of underwriting. As noted in the Economic Survey 2025 26, gross non-performing assets at 2.2% (September 25) and net non-performing assets at 0.5% have fallen to multi-decadal and record lows, sharply reducing provisioning needs. Credit growth of 12% and deposit growth of 10% continue to strengthen core income, while capital adequacy above 14% and a provisioning coverage ratio above 92% reflect strong balance sheets. Consolidation has also improved efficiency, reducing the number of PSU banks from 27 to 12. These reforms, coupled with tighter regulatory oversight, have driven profits from Rs 1.05 lakh crore in FY23 to Rs 1.78 lakh crore in FY25, making the FY26 milestone well within reach. Near term profitability looks sustainable, though long-term stability will depend on preserving asset quality, managing margin pressures, and sustaining governance led reforms.