Indian Bank plans to raise Rs 1,200 crore to support growth plan

Indian Bank is planning to raise around Rs 1,200 crore to support its growth plan. The bank is also planning to sell assets worth Rs 540 crore to asset reconstruction companies (ARCs).

Kishor Kharat, managing director (MD) and chief executive officer (CEO) of Indian Bank said to Business Standard that by the end of the current calendar year, the bank plans to raise the capital to support the growth.

"We are planning to issue around 4.75 crore shares" worth Rs 1,200 crore, said Kharat.

The bank has set a target of around Rs 3.6 lakh crore business for the current financial year (FY).

Kharat noted that the bank has already crossed the business of Rs 3.25 lakh crore and by September, it will cross Rs 3.40 lakh crore. The target of Rs 3.6 lakh crore is easily achievable, he added.

Bank also set a target of 3 per cent net interest margin (NIM), which will be aided by retail, agriculture, corporate and MSME (micro, small and medium enterprise) and clients.

"Our focus will be [on] RAM (retail, agriculture and MSME), which are easy to handle and NPAs (non-performing assets) are also less plus they are good business also," said Kharat.

During the first quarter (Q) of FY17, Indian Bank's loan book had corporate exposure to the tune of 51 per cent, which is brought down to 49 per cent in Q1FY18. On the other side, retail exposure grew to 51 per cent from 49 per cent.

Speaking about NPA, he said, they are very much in control. Gross NPA dropped to 7.21 per cent from 7.47 per cent quarter-on-quarter. At the year end, the bank wants to bring it to 5 per cent.

Of the 12 accounts, which were identified by the Reserve Bank of India (RBI) as large NPA accounts, its exposure is to around eights accounts and they are worth Rs 2,650 crore, said Kharat.

The bank also initiated and filed cases on seven more accounts worth Rs 1,200 crore at the National Company Law Tribunal (NCLT). In all these accounts, Indian Bank is the sole lender.

The bank made provision of Rs 130 crore in Q1FY18 and it plans to make a provision of Rs 365 crore for the whole year to these accounts, said Kharat

Bank officials also said that in another 10 accounts, which were worth around Rs 200 crore, either suppliers or creditors have initiated actions. In few cases, promoters themselves approached to declare insolvency.

Bank had allocated Rs 879.99 crore for provisions and contingencies in Q1 as against Rs 595.83 crore in the year-ago period.