We had a conservative approach for long time: Indian Bank MD Kishor Kharat

He also said that the bank is open for acquisitions

Indian Bank has reported 278.4 per cent growth in net profit for the quarter ended March at Rs 319 crore as against Rs 84 crore a year ago. Kishor Kharat, the MD and CEO of Indian Bank who assumed office this week, spoke to T E Narasimhan on his business vision of Rs 5 lakh crore by the end of March 2019. Heading one of the few public sector banks with good financials, Kharat said it is open for acquisitions. Edited excerpts: 

What is your medium-term vision and strategy for the bank?

This bank is now on a strong footing, but at the same time the bank is 110 years old. When we compare our bank with other banks that are a century old, like Bank of Baroda, Bank of India, Punjab National Bank, Allahabad Bank, and others, we see their business levels are much higher than that of ours. There are certain banks like Canara Bank, which was lower than us. Today they are double than us. 

That means the bank had a conservative approach for a long time and then we were limited in southern region. We thought this is the time to capitalise on our strengths and show growth in the business.

Even if I capture the existing walk-in business, then I will be able to achieve minimum business of Rs 3.5-3.6 lakh crore by end of March 2018. It may be upward, but these numbers will change when we grow.

The bank also set a target to bring gross non-performing assets (GNPAs) to less than five per cent (of total assets) from 7.47 per cent (now) and net NPAs to less than three per cent from 4.39 per cent. Net Interest Margin will be increased to 3 per cent from 2.6 per cent in 2017-18. Once we do double-digit growth, we will look at achieving (business of) Rs 5 lakh crore by end of March 2019. Whereas in five years' time, the bank will double the business. 

How optimistic you are on achieving this target considering challenges including rural economy facing huge drought in various parts of the country?

It is a reasonable target. We are expecting that domestic and global economies will improve. Some key sectors, like steel, road, power, have started coming back also. For example, steel capacity use has increased to 80 per cent from 30-40 per cent and the sector has become Ebitda-positive. (Ebitda is earnings before interest, tax, depreciation, and amortisation.)

While all other banks are actually not in good shape to capitalise or capture this business, we are in a better position to capture this business and will have early bird advantage.
 

Does it mean you will look at growing corporate loans?
 

Currently, 50 per cent comes from the corporate and 49 per cent from retail. This may become 50:50. It will be a calibrated strategy. It will not be alarming dis-composition of the existing situation.
 

Indian Bank’s USP has been a conservative approach. Will you be looking at taking the legacy forward? Some of the banks got into huge stress by focusing on growing loans. How do you plan to balance it out?
 

Today we are looking good, because all other banks are not in a good shape. But internally if you see our ratios for the last five to seven years, there has been de-escalation in the performance. Now that was happening because the bank was not growing.
 

If we would have grown the loan book even by five per cent, the NPAs would have been five per cent (7.47 per cent now). Ultimately, denominator efforts count a lot.
 

When we are a pan-India bank now, what is the harm in actually leveraging the entire presence. Too much conservative approach is also killing. Even internally for the staff, it is not helping career progression.
 

The learning from the failures of other banks can also help us grow. Definitely when we are growing, we will grow with caution and we will have continuous focus on asset quality; that will never be lost.
 

When we talk about growth, we immediately start talking about public sector banks but recently all private sector banks like HDFC Bank, Yes Bank, IndusInd Bank are also operating in the same environment. Yes Bank and IndusInd Bank are comparable with us. If they are able to grow in double digits, what is wrong with us? We are much more mature and have better skill sets than them.
 

Fact is we are not leveraging our strengths.
 

Since it is one of the few sound public sector banks, will you look at absorbing some other weak bank as part of growth plan?
 

We are prepared for that, if there is any opportunity, we will definitely like to look into it seriously.
 

Any fund-raising plans on the cards?
 

According to the rule, the government must bring down its stake to 75 per cent. Currently the government holds 82 per cent in the bank. We will look at a Follow-on Offering and may look at raising around Rs 1,000-1,200 crore. We should be able to do this before September-October.