Indian Bank reported an 11% year-on-year rise in net profit to ₹12,156 crore in FY26, driven by higher interest income from its core business. MD & CEO Binod Kumar tells Narayanan V about key profit drivers, FY27 outlook, and the impact of the West Asia conflict on its portfolio. Edited excerpts:
What are the key highlights of FY26 performance?
Our total business grew 12.79% (₹14.95 lakh Crore) with deposits up 12.29% (₹8.28 lakh crore) and advances 13.43% (₹ 6.67 lakh crore). A key highlight was CASA. In March 2025, our CASA ratio was 40.17%, which fell to 38.28% in June 2025. We then focused on improving CASA, and it has steadily risen to 38.87% in September, 39.08% in December, and now 39.67%. On the advances side, the RAM (retail, agri, MSME) segment was a key driver.
Within this, retail grew 18%. MSME advances, where we earlier saw 5–6% growth, rose 16.39% this year. Corporate lending also improved from 3% growth last March to 9.29% this year, despite shedding low-yielding advances. Despite a 125 bps rate cut, our net interest income increased, and domestic net interest margin declined only 12 bps to 3.36%.
How do you handle the CASA mobilisation challenge?
After the dip in June 2025, we focused sharply on CASA. There are structural shifts. Rising financial literacy is turning people into investors rather than savers, and government transactions are moving to just-in-time flows. These are realities we have to accept. Our focus has been on two areas: float money and salary accounts. Last year, we opened over 3 lakh salary accounts, which also helped in cross-selling housing loans, car loans and other products.
We are also pushing Point-of-Sale and QR codes. We have distributed 3.84 lakh QR codes, generating about ₹7,800 crore in deposits. When transactions happen through QR, at least 1–2 days of float stays with us. Instead of chasing bulk deposits, we are focusing on granular segments like salary accounts. We have also worked on activating inoperative accounts. Around 34 lakh were activated last quarter, bringing in ₹4,685 crore. So, the strategy is essentially centred on salary accounts and float income.
Which segments are driving advances growth?
Housing and vehicle loans were the key drivers in retail. Housing grew 14.5%, while vehicle loans grew around 40%, and we expect that momentum to continue. In MSME, we are seeing demand across sectors. Small and micro segments make up around 70% of our MSME portfolio, and these segments are doing well, with relatively lower default rates.
Has the West Asia crisis created any stress in the MSME portfolio?
Frankly, we are not seeing any stress so far. Our data also does not indicate any impact. Since August 2025, we have been observing the effects of US tariffs, and the West Asia conflict began around February. It is not that we have been under stress. It’s mainly because the government has absorbed much of the impact. At some point, there could be pass-through effects, but the government is very cognizant of the situation and understands that economic growth is a priority. The RBI Governor also recently indicated readiness to provide support if needed. I am confident that if required, the government will come out with appropriate measures. That said, we have prudently created provisions of about ₹310 crore, even though we are not seeing signs of stress. You build reserves in good times.
What is your FY27 business guidance?
Overall, I don’t see any significant slowdown due to the Gulf situation, and the growth momentum should continue. Our deposit guidance for FY27 is 9–11% and advances 11–13%, slightly higher than last year’s guidance of 8–10% for deposits and 10–12% for advances, as demand remains strong. One area to watch is recoveries. They will come down because the pool of non-performing assets is shrinking. Recoveries declined to ₹6,600 crore last year from ₹7,600 crore earlier, and for this year we are guiding ₹4,500–5,500 crore. It is not a concern as such but the pool itself is reducing.
How are you responding to concerns around AI risks like Claude AI’s Mythos?
The Finance Minister has already made the outcome of the meeting with public sector banks last week. There are concerns, both at the industry level and individually, and we will be working on them. If AI poses risks, we also have to look at AI as a solution to counter those risks. We are in the process of strengthening our internal cybersecurity team, especially with people who understand AI. We already have capable resources and are also hiring AI experts so that, if needed, we can develop in-house capabilities. At the same time, IT risk does not lie only with the bank, it also extends to service providers. For instance, if we use a core banking solution from a company, the risk is with them as well. So, we are sensitising all stakeholders to identify vulnerabilities and address them. Some measures are being taken at our end, and there are also industry-level efforts underway.
What is your NIM guidance?
NIM for the last quarter was 3.23%. I don’t see further rate cuts, so ideally there should not be much impact from that side. At the same time, I don’t expect any immediate rate hikes either. However, there will be some pressure due to the higher cost of deposits. Because of that, I am guiding NIM in the range of 3.10% to 3.25%, implying only a marginal decline.