IndusInd to drop large corporate accounts

IndusInd Bank is exiting large-sized corporate accounts which are yielding low returns to focus more on small and medium enterprises (SMEs).

The private sector bank has decided to replace its Rs 1,000 crore lending to public sector undertakings (PSUs) with SME lending, Bhaskar Ghose, managing director, said. The bank's corporate portfolio will, however, remain static on a net basis at Rs 5,500 crore, he added.

Loans extended to PSUs have to be offered at fine rates of 6-8 per cent since they have access to cheaper funding by tapping the market directly.

In contrast, loans to SMEs yield better returns as these are above the bank's prime lending rate. With increasing focus on SME business, the composition of the bank's corporate portfolio will change.

At the same time, the bank's around Rs 3,000 crore retail portfolio is expected to grow by about 83 per cent to Rs 5,500 crore in the current fiscal.

The bank has written retail loans of Rs 840 crore in the first quarter and is expected to book additional retail business of Rs 3,300 crore during the year. The composition of the bank's retail portfolio has gone up to 50 per cent from 5 per cent last year.

In a process of revamping its corporate portfolio the bank recently appointed two senior bankers to lead its corporate banking and credit departments.