Will establish IOB as bank focused on South India: MD and CEO Karnam Sekar

In a Q&A, the bank's chief also dwells the strategies to trim down the lender's non-performing assets

The government has designated four banks for regional focus; one of them is Chennai-based Indian Overseas Bank (IOB). Karnam Sekar, managing director and chief executive officer, IOB, speaks to T E Narasimhan on the bank’s strategy for growth in South India. Edited excerpts:

How do you read Government's plan to make IOB a regional bank for the south?

Ever since I joined the bank in July, I have been always saying, internally and externally, that we are the Bank of Tamil Nadu and other southern states. Even before the Government's announcement, we had decided to focus on southern states.

Our routes have been in South India for the past 82 years, and we will spread the roots further and establish our leadership position in south India. We know the culture, we know the customers, and we know the ethics and mood of the region. We will be able to exploit business opportunities here better. Most of the staff is also from South India. Customers are also more loyal to IOB. These things will help establish IOB as the Bank for South India.

Where do you see opportunities? What will IOB's strategy be in terms of sectoral focus?

Lenders like Andhra Bank, Corporation Bank and Syndicate Bank are all part of the national banking system and their focus is national. The space that they have left now can be occupied by IOB, as our network is also mostly in the south. IOB has 3,273 branches including 1,119 in Tamil Nadu, 143 in Kerala, 228 in Karnataka and 162 in Andhra. Most of our staffs is also from southern India.

IOB has been specialising in MSME from the beginning. It ws only in 2013-14 that the corporate portfolio was added. We have recently decided not grow the corporate book greatly. We want to regain the MSME space, so going forward, the focus will be MSME, agriculture and retail.

Southern States are considered to be progressive in thinking and are industrially advanced as well. In the next 4-5  years, southern states will play a major role in achieving the government's $5 trillion economy, mission, and IOB will play a major part to support southern states. My vision would be to align our priorities with four States in this region and grow with them.

IOB is under pressure due to NPAs and is still under prompt corrective action. Will that affect your growth or vision?

This year there will be a resurgence in IOB. We hope to come out of the red by December, as we see NPAs reducing. Though they are high, provisions for 75 per cent have been made. So whatever we recover will boost our bottom line. We are attacking NPAs on two or three fronts. 

We have nearly 8,000 properties to be auctioned, though not much has happened in the last 3-4 years here. We are now focussing on auctions following some success in July, and going forward, we will have one mega auction every month.

Second, we had a one-time settlement for amounts up to Rs three crore earlier. That threshold has now been raised to Rs 25 crore, allowing us to cover more accounts, mainly MSMES. Strict targets have been fixed.

We are also focussing on advances against jewellery and housing loans. In the last 4-5 years, IOB has not done a great job in housing loans per se. We want to make up for that. We see a lot of potential in jewellery loans. Apart from these two segments, we will focus on AAA, and Double AA will add to the denominator. If the level of advances goes up and NPAs come down, the ratio will improve. One or two NCLT accounts will also get cleared.

Once our net NPA ratio comes down to below 6 per cent it will bring us out of PCA.