State-owned Indian Bank remains confident of achieving its FY27 asset quality and recovery targets, with Managing Director & CEO Binod Kumar indicating that the lender is on track to reduce gross non-performing assets (GNPA) to 1.50-1.60%, while maintaining balanced credit growth without sacrificing margins.
Speaking during the bank’s Q1 FY27 earnings call, Kumar said Indian Bank has already recovered nearly ₹1,900 crore in the first quarter against its full-year recovery guidance of ₹4,500-5,500 crore.
“We expect gross NPA to reach 1.50-1.60%, and I do not see any challenge in achieving that,” he said.
CASA nears 40% target
The bank’s CASA ratio stood at 39.73% during the quarter, close to its 40% guidance. While acknowledging that CASA mobilisation remains challenging, Kumar said branch-level participation has improved significantly.
More than 51% of branches achieved their CASA targets during the quarter, compared with just 25-27% in the corresponding period last year, reflecting stronger execution across the network.
MSME stress yet to emerge
Despite industry concerns over stress in the MSME segment, Indian Bank said its portfolio remains healthy.
The lender’s Special Mention Account (SMA) book declined to 4.69%, from 7.99% a year earlier, indicating improving asset quality. Kumar said the bank remains watchful but has not yet seen any material stress. If required, eligible accounts can also benefit from the government’s Emergency Credit Line Guarantee Scheme (ECLGS).
Balanced growth over aggressive expansion
For FY27, Kumar said the bank would prioritise profitable and balanced growth rather than chasing loan expansion at the cost of margins.
“If deposits grow by 13%, I would not mind advances growing by 15%, provided we do not compromise net interest margins,” he said, adding that credit growth of 13-14% would also be a healthy outcome.
The bank expects gold loan growth to moderate to 15-16% this year after last year’s sharp expansion driven largely by rising gold prices.
Disciplined pricing to protect margins
Indian Bank has consciously avoided expensive bulk deposits while selectively pruning low-yield corporate loans.
The bank shed nearly ₹6,000 crore of aggressively priced advances during the quarter and maintained bulk deposits at around ₹1.61 lakh crore despite intense competition.
Kumar said margin movement is expected to remain largely stable, with lower funding costs offsetting the impact of loan repricing.
ECL provisioning underway
The bank expects the transition to the Expected Credit Loss (ECL) framework to have an overall impact of ₹3,000-3,500 crore.
Indian Bank has already provided ₹1,000 crore and plans to make an additional ₹500-1,000 crore provision during FY27.
Eyes up to $2 billion overseas deposits
Executive Director Ashutosh Choudhury said the bank plans to mobilise $1.5-2 billion through FCNR(B) deposits and external commercial borrowings (ECB), generating liquidity of around ₹18,000 crore for domestic lending.
He said demand for domestic credit remains strong and the bank expects the benchmark 10-year government bond yield to remain around 6.65%, barring changes in the government’s borrowing programme.
₹3,000 crore IT investment
Indian Bank is also stepping up technology investments, earmarking a total ₹3,000 crore IT budget for FY27, including ₹750 crore for artificial intelligence initiatives and cybersecurity.
The bank plans to strengthen its cyber security operations centre, implement zero-trust architecture and user behaviour analytics, and build a data lakehouse to comply with the Digital Personal Data Protection Act while enhancing data management capabilities.