IndusInd Bank has met its target of doubling in terms of clients, loan book and profits between 2014 and 2017, and has the same goal for March 2020, managing director and CEO Romesh Sobti said after announcing the bank’s fourth-quarter results. Refusing to clear the air on the buzz around the bank acquiring a microfinance lender, Sobti said the bank’s microfinance portfolio will grow to Rs 10,000 crore from Rs 3,000 crore over the next three years. Edited excerpts:
What are your plans for inorganic growth, considering the buzz around you buying Bharat Financial Inclusion?
We don’t rule out acquisitions of portfolios, but the doubling (of the bank’s clients, loans and profits over the next three years) that we are talking about will be devoid of any inorganic play. We look at the whole spectrum, but whatever makes sense to you in terms of being RoE (return on equity) and earnings accretion on day one makes sense to us.
Microfinance makes sense to us, in spite of whatever you see. I think microfinance is a sustainable livelihood business. We understand that business. But whether there’s an acquisition or not, this book, which is almost `3,000 crore now, will become `10,000 crore organically in the next three years.
It has now been nearly six months since demonetisation. How have you seen its impact pan out?
Actually, we should now be talking about the impact of remonetisation because remonetisation is now playing out in Q1. If you say demonetisation, it probably has remonetised. So what are the changes in business model? Let’s go back to demonetisation. Its impacts were seen in the early days on certain businesses where cash dominated, such as microfinance, some areas of vehicle financing and things like that. There was a V-shaped recovery we saw (thereafter) in terms of collections, which are now back to the 95-98%, except for some hotspots with 75-75%, where there is a lag. So there is some impact. The impact that we went through in Q4 was on disbursements only in these areas. The corporate part of the book did not see any impact. There’s a lot of conjecture going on whether SMEs got impacted. We have not seen any (impact) so far.
What is your loan book mix like and where would you like to see it?
Essentially, corporate to retail is 60:40 because corporate grew faster. We want to move steadily to a 50:50. There are two things that we want to move to in the loan book. One is to have to have corporate to retail at 50:50 and within retail, (to have) vehicle to non-vehicle at 50:50.