Our recovery is more than slippages: Indian Bank MD & CEO Shanti Lal Jain

State-run Indian Bank has set a recovery target of Rs 8,000 crore. The bank expects a loan book growth of 12 per cent in 2023-24 (FY24). SHANTI LAL JAIN, managing director and chief executive officer, Indian Bank, in conversation with Shine Jacob, talks about the worries in the micro, small and medium enterprise (MSME) segment, corporate credit growth, and guidance for FY24. Excerpts:

Your dependency on retail, agriculture, and MSME (RAM) is 62 per cent. What is your strategy?

Risk is well-spread, which is why we continue to maintain profit. Retail is growing by 13 per cent, home loans (including mortgage) by 11 per cent, automotive loans by 28 per cent, and personal loans by 46 per cent. Crop loans and jewellery loans are growing by 20 per cent, investment credit by 30 per cent, and infrastructure by 28 per cent.

In MSME, we have grown by 7 per cent. If you factor in the emergency credit line guarantee scheme repayment, it is again 10-11 per cent. During the quarter, our RAM advances grew by 12 per cent.

We had earlier given a loan book growth guidance of 12 per cent and ended at 14 per cent. This time, we are giving a conservative guidance of 10-12 per cent.

Are you seeing any stress in the MSME sector?

A majority of these accounts have come out of stress. If you see our total slippages, of the total Rs 6,642 crore for the whole year, Rs 3,000 crore is from MSMEs.

On the corporate credit side, you saw an increase from Rs 1.5 trillion to Rs 1.7 trillion in the past year. What is your assessment on corporate credit, especially when credit pricing is irrational due to intense competition for corporate advances?

It is showing up as 12 per cent, but there is reduction in non-performing assets by Rs 6,000-7,000 crore in the corporate book. We are getting growth from road projects, textile, cement, city gas distribution, logistics, warehousing, housing, and non-banking financial companies.

How are you seeing the recovery side of it?

The recovery target was Rs 8,000 crore for 2022-23 (FY23). We ended the year with a better-than-expected Rs 8,500 crore.

Our recovery is more than our slippages. For the whole year, our slippage was only Rs 7,000 crore. In the January-March quarter, the slippages were Rs 2,566 crore, but recovery was Rs 2,990 crore.

Our recovery from the National Company Law Tribunal was Rs 1,029 crore in FY23. We are expecting a recovery of Rs 1,300 crore in FY24.

Under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, we had a recovery of Rs 734 crore last year, against Rs 500 crore earlier, and are expecting Rs 800 crore in FY24.

What about fundraising plans?

We have taken board approval to raise equity capital aggregating up to Rs 4,000 crore and Rs 3,000 crore tier I/II capital. The bank is adequately capitalised. But in case of need, we have taken enabling provisions from the board and shareholders.

What were the major growth drivers in the fourth quarter?

A major driver was an increase in net interest income, up 29 per cent. Non-interest income has grown 27 per cent. Recovery in bad debt up 337 per cent. We had a recovery of Rs 860 crore, against Rs 197 crore last year. Fee income has grown 12 per cent.

It has been three years since the merger with Allahabad Bank. How is the synergy?

In the first year of amalgamation, we had a profit of Rs 3,000 crore. Before that, a loss of Rs 4,600 crore. In the second year, we had a profit of Rs 3,900 crore and in the third year, we crossed Rs 5,200 crore.