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Informist, Saturday, May 3, 2025

NEW DELHI/MUMBAI – State-owned lender Indian Bank does not see immediate relief from the deposit pressure but expects it to come down gradually, Managing Director and Chief Executive Officer Binod Kumar said Saturday. "When differential between the fixed rate and CASA (current account savings account) comes down, deposit growth will start picking up. But it will take some time, may be one to two quarters," Kumar said at a post-earnings press conference.

The bank's deposits grew 7% on year to INR 7.37 trillion as of Mar. 31. Within the total deposits, current account savings account deposits grew 0.8% on year to INR 282.85 billion. The current account savings account ratio was at 40.17%, down from 42.31% a year ago. The bank announced its financial results for the quarter and year ended March earlier in the day. The lender reported a net profit of INR 29.56 billion for the quarter, up 31.6% on year. The total income for the quarter rose 10% on year to INR 185.99 billion.

Speaking about the bank's strategy to mobilise deposits, Kumar said the bank should not be fixated on deposits but should look at funds for deployment. "If we are getting funds from the alternate channel, that is welcome," he said, citing the example of INR 100 billion raised through infrastructure bonds in the financial year 2024-25 (Apr-Mar) and INR 100 billion through refinancing. "These types of products will also come into play because even maintaining CASA will be a challenge as customers' preferences have now changed," Kumar continued. "Nobody wants to keep deposit in saving fund bank or even fixed deposit when they have opportunity to earn higher returns. So that shift, along with increase in financial literacy, will have a gradual impact on CASA."

The government and the Reserve Bank of India have been highlighting for the past one year that banks need to mobilise deposits to strengthen the sector, especially because credit growth is outpacing deposit growth, and also to prevent the risk of over-participation by retail investors in the equity market. Indian Bank announced earlier in the day that it would raise a total of INR 120 billion in FY26 through a combination of debt and equity instruments.

According to RBI data, banks' credit-deposit ratio was 80.8% at the end of January, as against 78.9% on Oct. 4. Former central bank governor Shaktikanta Das, in his last monetary policy statement in December, had said data suggested the gap between growth of credit and deposits of scheduled commercial banks had narrowed with deposits keeping pace with loan growth. "The Reserve Bank's supervision of the financial sector and its entities continues to be vigilant and proactive," he had said.

BUSINESS, TECH STRATEGY

On the bank's strategy for FY26, Kumar said it intends to focus on lending to the retail and micro, small, and medium enterprises segments. At the end of March, lending to the retail segment was to the tune of INR 1.19 trillion, up 13.7% on year, and loans to the MSME segment amounted to INR 941.52 billion, up 11.9% on year. "Earlier, our MSME growth used to be in the range of 5-7%," the managing director said. "This time we have been able to show a growth of around 12% and we will like to continue that momentum that we have built." 

He added that the bank would continue with its focus on priority-sector lending. At the end of March, it outdid the RBI's stipulated target of 40% towards priority-sector lending, achieving 44%.

Regarding digital innovations, Indian Bank's senior management said that in FY25, the bank undertook 26 digital journeys and in FY26, it is planning another 37 journeys. "In the first quarter, we are proposing nine journeys to be live, 14 in Jul-Sept, nine in Oct-Dec, and five in Jan-Mar," the management said.

Another initiative the bank has undertaken is to launch "a new exclusive application which will be a very light app like Paytm or Google Pay". Seeing the huge volume of online transactions, the bank has planned the application, which will be named UPI Pay, the management said. The bank added that in FY25, its digital business soared 106% to INR 1.67 trillion and it is projected to rise 34% to INR 2.25 trillion in FY26.  End

Reported by Priyasmita Dutta and Christina Titus

Edited by Rajeev Pai

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