Indian Bank NPA to rise, no change in board after merger with Allahabad Bank

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Published: March 19, 2020 9:57:17 PM

"The existing Indian Bank board will not change from April 1 post amalgamation and the headquarters will remain at Chennai," Indian Bank MD and CEO Padmaja Chunduru said.

Net NPA of Indian Bank was 3.4 per cent while that of Allahabad Bank is 5.1 per cent.

Indian Bank on Thursday said its board will remain unchanged following its merger with Allahabad Bank on April 1, but its non-performing assets will soar. The coronavirus outbreak also poses new threats to the amalgamated entity to clock around 12 per cent loan growth at the end of the next fiscal. “The existing Indian Bank board will not change from April 1 post amalgamation and the headquarters will remain at
Chennai,” Indian Bank MD and CEO Padmaja Chunduru said, asserting that amalgamation is on schedule amid coronavirus outbreak.

She said net NPA of Indian Bank was 3.4 per cent while that of Allahabad Bank is 5.1 per cent. However, what will be the net NPA of the amalgamated entity needs to be worked out. The merged entity is likely to tap capital markets for growth capital during the second half of 2020-21, she said.

The combined entity’s capital to risk-weighted assets ratio (CRAR) will be around 13 per cent. “We have done our projection that it should be well enough to take care of the growth for at least the initial period. 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, she said.

The bank was projecting a 12 per cent loan growth in the first year of the amalgamated entity. “But, we may have to review it in wake of the
coronavirus threat,” Chunduru said. Global advances figure for the merged entity will be around Rs 3.83 lakh crore. The lender’s both corporate and retail loans would stand at around 50 per cent of combined total loan book.

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