IOB’s credit growth at 24 per cent is significantly higher than the system growth of around 16 per cent. What has driven this, and what is your outlook for FY27?
The growth has been all-round, with all our 3,500 branches contributing. If you look at the credit portfolio, almost 78 per cent is retail, agriculture, and micro, small and medium enterprises or MSME (RAM). This segment allows participation from across the field. We have created strong systems, invested in training, strengthened underwriting skills, and set up processing centres. The combined effect of all these initiatives has helped. People across the organisation — regional managers and branch managers — are encouraged to take lending decisions. The overall atmosphere is such that everyone wants to contribute, and the sum total of efforts, particularly in retail, agriculture, and MSMEs, has driven this growth.
For FY27, we are targeting around 12 to 13 per cent credit growth and 13 to 14 per cent deposit growth. Deposit growth was about 18 per cent last year, and we would like to continue with similar momentum. If you see our savings deposit growth, it has been around 15 per cent, and term deposits have grown by nearly 18 per cent. We will try to maintain that level, though at a slightly moderated pace. The guidance is conservative, this is the minimum we will do. Over the last three years, we have consistently outperformed our guidance, and if circumstances permit and the economy supports, we will aim to grow beyond these levels.
Margins have declined slightly during the year. Have they bottomed out, and what is the outlook?
Margins have come down by only about 4 basis points (bps), from 3.25 per cent in March 2025 to 3.21 per cent this year. If you factor in the cumulative 125 bps reduction in the repo rate over the past year, we have largely maintained margins within a narrow range. So, in that context, we have been able to hold margins quite well. Going forward, we expect to maintain the net interest margin (NIM) at around the current levels, broadly in the 3.20 to 3.25 per cent range. About 39 per cent of our loan book is linked to External Benchmark Lending Rate (EBLR), and agriculture loans are not linked to EBLR.
What is the expected impact of the expected credit loss (ECL) framework on provisioning?
With the revised guidelines, the exact impact is still being worked out. However, we have already taken a proactive approach. In the December quarter we said that we created an upfront provision of ₹1,500 crore exclusively for ECL. In the March quarter, we added another ₹250 crore, taking the total additional provision to ₹1,750 crore as of now. While the transition can be spread over four years, our internal plan is to front-load provisions and address the requirement in the initial period itself rather than spreading it over five years. We intend to keep adding provisions every quarter so that when the framework is fully implemented, we already have a sufficient cushion in the balance sheet. This ₹1,750 crore is over and above our regular provisioning.
What steps are you taking on IT and vendor risk management
A number of initiatives are underway. We have multiple vendors handling different activities across IT (information technology) and non-IT areas. At the IT Strategy Committee level, all service-level agreements, their implementation, and onboarding of new vendors are reviewed in detail. We have also brought in external advisors, including one from IIT Chennai, to guide us on IT systems and vendor management. There is enhanced monitoring and control over vendor resources working within the bank, and we are strengthening oversight to ensure vendor management becomes more robust and seamless. This is not a recent initiative, we have been working on it for over a year, and it remains an ongoing process.
 "Ajay Kumar Srivastava, MD & CEO of Indian Overseas Bank.")