Indian Bank sets sights on zero NPA

Indian Bank has set its sights on becoming a zero non performing asset (NPA) bank by March 2007, when the bank celebrates its centenary year. As on June, the net NPA stood reduced at 2.43 per cent compared with 2.71 per cent as on March 2003.

The Bank is also planning to come out with an initial public offering (IPO) to raise its capital base by the end of the current financial year. The recent Rs 300 crore Tier II bond issue was well accepted by the markets and post-issue the capital to risk assets ratio stands at over 15 per cent.

"It is the endeavour of the bank to emerge as one of the best banks in the country and we plan to be a zero NPA bank by March 2007. The recovery in NPA for the quarter ended June 2004 was Rs 62 crore and enforcing the Securitisation Act has helped the bank recover its assets," M B N Rao, chairman and managing director, Indian Bank told Business Standard during his recent visit to Ahmedabad.

Asked about bank's plans on merger and acquisition, Rao said, "Indian Bank will always gain in terms of merger and acquisition. The bank has major brand equity, as per the recent Neilson ORG survey, Indian Bank emerged the number one service brand in south and fifth amongst all nationalised banks in the country. At present, we are in talks with few of the prospective partners but nothing has been finalised as yet. We also plan for an IPO to enhance our capital by the end of the current financial year.

"Apart from being a zero NPA bank, the bank's major focus in the next three years will be on technology upgradation, launching retail products, and extending credit to the agriculture and other priority sectors," Rao added.

In tune with the government's directive to double the credit to the agriculture within 2007, the bank has drawn up a four-year Agriculture Credit Plan (ACP). The loan disbursal target for the current year is estimated to be around Rs 1,840 crore. The bank proposes to employ over 100 farm graduates for six months for effective marketing of agricultural schemes and products.

To provide impetus to the agriculture sector the bank plans to implement Golden Harvest Scheme, I B Mortgage Scheme, besides establishing Micro Credit Kendra's and self help groups.

The bank has, so far, computerised 889 branches as on June 30, 2004 with a business coverage of 90.80 per cent. The bank has 110 ATMs in operation and another 13 ATMs are under installation at various locations.

The bank provides access to over 8,000 ATMs across the country through its ATM sharing arrangements with other banks.

The bank has tied up with HDFC Standard Life for the distribution life insurance products through the bank's various branches and with United India Insurance for the distribution of its general insurance products.

The bank has also tied up with UTI for the distribution of its mutual fund schemes. The bank has recently tied up with Sidbi to jointly finance the SSI and SME sectors.