'Cautious moves in new territories'

BANKER-SPEAK: M S Sundara Rajan

, while outlining a slew of initiatives the bank intends to undertake very soon. A few excerpts:

What will be your business strategy to take Indian Bank forward?

My predecessor, K C Chakrabarty, has done exemplary work in taking Indian Bank forward and our endeavour will be to continue the same.

While we will continue to focus on agriculture, small and medium enterprises, small scale units and retail, one of the most important tasks will be to complete the core banking solution (CBS) process by the year-end. Of the 1,470 branches of Indian Bank, 1,114 have already been brought into the CBS fold.

Another important focus will be on improving the quality of our customer service and so a continuous monitoring system will be put in place. We have also initiated steps to curb money-laundering practices in 50 branches on a pilot basis.

What are your business targets for FY08? What kind of deposits and advances growth are you targeting?

In FY07, Indian Bank generated a total business of Rs 76,149 crore, of which Rs 47,091 crore comprised deposits, clocking a growth of 19 per cent over Rs 63,782 crore generated in FY06. We are looking at 25 per cent growth on the credit front, while we wish to increase deposits by 20 per cent.

Following the finance minister's guidance to rebalance credit portfolios, what kind of rebalancing have you undertaken?

In line with market trends, we had revised interest rates on term deposits during the year. In order to maintain our margins, we had also revised the benchmark prime lending rate (BPLR) upward by 50 basis points in February 2007.

However, we have priced the loans in such a manner that the productive sectors are at a spread of 2 per cent over the BPLR against the spread of 4 per cent for other segments.

Has the full impact of high deposit rates been seen on your net interest margin (NIM)?

We have not increased the deposit or lending rates this quarter. The bank has sufficient liquidity and there is no need for us to go for high cost deposits. We also did not go for any special deposit schemes offering higher rates of interest. Hence, we do not expect any pressure on net interest margin during the first quarter of 2007-08.

Have you finalised the sale of your bad loans portfolio worth Rs 1,500 crore?

We are receiving various offers for the sale of our bad loans portfolio. But, it is too premature to talk about it as talks are still going on.

How do you look at the three bank alliance forged between Oriental Bank of Commerce, Indian Bank and Corporation Bank?

The coming together of the three banks is a wonderful process, especially in a world where size matters. The consortium is a good way of doing business as the three partners will be sharing expertise. Without sacrificing our individual identities, the alliance will look at a competitive collaboration for surging ahead in business.

Most banks are looking at augmenting their fee-based income with insurance and mutual fund ventures. What are your plans on this?

Indian Bank's non-interest income in FY07 was around Rs 733 crore, 58 per cent growth over the previous year. We are looking at sustaining the same growth rate this year also. We will look at tie-up opportunities as and when they come our way.

Also, with the implementation of CBS, around 10 per cent of our staff will become surplus and those who have an inclination towards marketing will be involved in fee-based income generation.