IOB raises lending target for home, MSME loans; hopes to be profitable soon: CEO

Indian Overseas Bank (IOB) will enhance lending to MSMEs as well as give out more home loans, its CEO Karnam Sekar said and expressed hope that the bank will turn profitable soon.

"We have devised a formula-based plan so that our recovery position is further improved. Our focus on recovery is yielding good results but our target would be on growing MSME and retail portfolios," Sekar told PTI in an interview here.

The Public sector bank, which is under the RBI's prompt corrective action (PCA) currently and has been incurring losses for the past 18 quarters, posted large losses because of huge non-performing assets (NPAs) for the past 7-8 years, caused mainly on account of large exposure in the corporate sector, he said.

Sekar added that the bank made the required provisioning. As a result, net NPAs (as percentage of total advances) as on December 2019 has come down below 6 per cent and that is a criterion to bring the bank out of the PCA, he said.

The bank's managing director and chief executive officer (MD & CEO) said that the next criterion is to make some profit. "So, this quarter onwards, not only this quarter but also for the coming quarters, we are likely to make profits."
"We have created asset recovery branches, we have identified 16 such branches and these NPA accounts have been shifted there. These are being directly controlled from the central office."
Sekar added that going forward, we do not see such slippages because we have screened all the accounts. "For the corporate segment, it will be almost near zero. So, that ways, additional NPAs will not be there."
He said the company's focus on recovery is yielding good results and the bank's actual operating profit is in the range of Rs 550 crore every quarter. "This recovery, in return, is giving the provision back to us."