Indian Bank Vizag to focus on low cost deposits now

Indian Bank's Visakhapatnam circle, which comprises five coastal districts from Srikakulam district to West Godavari district, has decided to focus on low cost deposits in the remaining part of the current fiscal to increase the bank's net profits.

Speaking to Business Standard, Mohammed Najumuddin, assistant general manager of Indian Bank's Visakhapatnam circle, said: "In the first six months of the current fiscal, we have achieved around 650 per cent growth in deposits, most of which are term deposits. Now, in a bid to increase our profitability, we are trying to focus more on low cost deposits in the remaining part of the current fiscal."

Last fiscal, Indian Bank's Vizag circle collected new deposits to the tune of Rs 50 crore of which its collection in the first half of the last fiscal was Rs 20 crore. In the first half of the current fiscal, the bank has collected new deposits to the tune of Rs 150 crore, thus posting a growth of around 650 per cent.

"Of the Rs 150-crore new deposits, close to 90 per cent were only term deposits. The bank's term deposits increased significantly due to the local public sector undertakings' deposits. But the bank has been paying around 5.5 per cent interest on these term deposits while it is paying only 3.5 per cent interest on low cost deposits. To increase our profits during the second half of the current fiscal, we are concentrating on low cost deposits. In the second half of the current fiscal, we expect another Rs 50 crore new deposits, of which our target is to garner Rs 30-40 crore low cost deposits," Najumuddin added.

Najumuddin said that the Vizag circle's net profit increased to Rs 7.18 crore in the first half of the current fiscal as compared to Rs 5.08 crore in the last fiscal's corresponding period, thus registering a growth of around 41 per cent. "If we can increase our low cost deposits, our profits too will go up further," he said.

Indian Bank's Vizag circle expects Rs 15 crore in net profits this fiscal as compared to Rs 11 crore last fiscal. Interestingly, all the 44 branches that come under the purview of Indian Bank's Vizag circle are generating profits individually.

"The bank has issued notices to 55 defaulters under the Securitisation Act. With this, other defaulters are also approaching the bank to clear off their old dues by negotiations," Najumuddin said. By the end of March 2003, the bank's gross NPA was 13.2 per cent. It came down to 7.29 per cent by March 2004. In the first half of the current fiscal, our gross NPA dipped further to 5.69 per cent. We are aiming at reducing our NPA to 4.23 per cent by the end of the current fiscal," he added.

"In the current fiscal, the bank expects to sanction loans to the tune of Rs 103 crore. The bank has already sanctioned Rs 53 crore advances in the first half of the current fiscal. Of the total advances, around 30 per cent are agricultural loans," Najumuddin said.