Although the Coronavirus outbreak poses new threats to India’s economic growth, for the amalgamated entity of Indian Bank and Allahabad Bank it “should be possible” to clock around 12% loan growth at the end of the next fiscal. The merged entity, which is scheduled to start functioning from April 1, may tap markets for growth capital during the second half of 2020-21, said Padmaja Chunduru, MD & CEO, Indian Bank.
“We have put 12% loan growth for the amalgamated entity for the first year of operations. That was the projection which we had made,” Chunduru said during a conference call on Thursday.
To start with, global advances figure for the merged entity will be around Rs 3.83 lakh crore. The lender’s corporate and retail loans stand at around 50% of its total loan book.
The proposed merger of Chennai-based Indian Bank and Kolkata-based Allahabad Bank will make the merged entity the seventh largest bank in India. Indian Bank is the anchor bank in this merger process. Notably, the merged entity will be known as Indian Bank and will have its headquarters in Chennai. Amalgamated Indian Bank will have over 6,000 branches without much overlap.
“Credit growth of 12% was put in place when we were doing amalgamation planning. Let us see how long coronavirus outbreak will go on and how quickly we will come back (to normal). On that basis we will recalibrate, if necessary. But it’s (2020-21) a long year, and it has not even started. I think this should be possible. However, we will take a review again in two months time,” Chunduru averred.
The combined entity’s capital to risk weighted assets ratio (CRAR) will be around 13%. “We have done our projection that, it should be well enough to take care of the growth for at least the initial period. And as the position evolves, for the growth capital we will be reaching the markets for the bank. We have a plan to tap the markets for the second half of the next fiscal. But both the quantum and the timing will depend on the market conditions. There is absolutely no urgent necessity for it,” she said in a reply to a question asked by FE.