The bank has enabling approval to raise up to ₹5,000 crore, though the final size may be calibrated depending on requirement. Kumar said the ECL transition could have an impact of ₹4,000-6,000 crore, which the bank intends to absorb, with part of the buffer already built through additional provisions of around ₹800 crore. The capital raise could be structured in tranches, with flexibility to scale down the size, he said, adding that investor appetite for the QIP is not a concern.
“The QIP is only for the ECL requirement. We are initially looking at around ₹5,000 crore, with flexibility including a greenshoe option, though the final size will depend on the situation. As far as raising is concerned, I do not see any challenge. The last QIP was subscribed multiple times and we expect similar investor interest. Assuming the entire ₹5,000 crore is raised, government holding will come down from 73.84 per cent to 70 per cent,” he said. “We have already built some buffer through additional provisions, and the ECL impact, estimated at around ₹4,000 crore-Rs 6,000 crore, can be absorbed over time,” he added. RBI has allowed banks to spread the additional provision requirement arising out of ECL norms over four years.
The proposed issuance could lead to some dilution in government shareholding from the current level of around 73.8 per cent, depending on the final size of the issue.
He further said the bank is working on setting up a separate wealth management vertical, which could be rolled out in the second half of the current financial year.
“Wealth management is something we need to build. If you look at the banking sector over the next decade, margins at current levels will not sustain. As the economy matures, they could moderate to below 2.5 per cent. At that point, banks will need alternative sources of income,” he said.
Kumar added that the opportunity is significant given the rising number of high net-worth individuals in India, with most of the business currently concentrated among private sector banks and a few large public sector players.
On business growth, the bank has built a corporate loan pipeline of around ₹50,000 crore, of which around ₹20,000-30,000 crore is spread across sectors after excluding a large government-linked exposure. He said demand is largely coming from segments such as renewable energy, including battery storage and solar projects, transmission infrastructure, and data centres. The bank has already underwritten two data-centre projects in March, Kumar said.
Indian Bank’s corporate loan book stands at around ₹2.14 trillion, with the overall loan mix at 65 per cent retail and 35 per cent corporate. The bank intends to maintain this composition going ahead.
On digital strategy, Kumar said the share of digitally sourced business has risen to around 18 per cent and the bank is targeting 50 per cent over the next three to four years, with a focus on retail lending and gradual expansion into liability products such as savings accounts.
Kumar said there are no immediate concerns from farm loan waivers, noting that no such announcements have been made in key states so far and collections remain stable.
Further, the bank is open to participating following the regulatory changes. He said the bank was already involved in such financing in an indirect manner through cases under the insolvency framework.
However, valuation remains a key consideration, as the bank would need to be satisfied that the asset is appropriately priced, with external agencies typically supporting the assessment.
Kumar said the approach would depend on the size of the transaction. Smaller exposures can be undertaken on a standalone basis, while larger deals would be pursued through a consortium structure to ensure risk is shared and the bank retains the capacity to absorb any potential stress.
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