Chennai-headquartered Indian Bank plans to recover about Rs 7,000 crore of bad loans in the current financial year, managing director and CEO Shanti Lal Jain said.

The state-run bank intends to sell Rs 400 crore of non-performing assets (NPAs) to asset reconstruction companies (ARCs) in FY25. The lender sold Rs 464 crore of NPAs to ARCs in the previous financial year.

Indian Bank has also received approval from the Reserve Bank of India and shareholders to raise Rs 5,000 crore. The capital raise will be made at a favourable time, Jain said.

In the fiscal first quarter ended June, the bank reported a 41% jump in its net profit to Rs 2,403 crore amid a decline in bad loans. In the year-ago period, net profit stood at Rs 1,709 crore.

"Last time, we recovered about Rs 8,700-Rs 8,800 crore. But what happens is slowly, this number may come down and this time we have planned that we will be making a recovery of around Rs 7,000 crore," Jain told reporters.

Keeping in line with the recovery target for this financial year, the bank mopped up Rs 1,937 crore in the April-June quarter. The recovery amount is expected to exceed the slippages for the current fiscal, Jain said.

The slippage ratio contained to 1.50% in June 2024 as against 1.57% a year ago.

The bank expects loan growth to be strong in the current fiscal, armed as it is with a corporate loan pipeline of Rs 40,000 crore. The undisbursed working capital was around Rs 19,000 crore out of the Rs 40,000 crore in the pipeline, said Jain.

Corporate lending constitutes 38% of the bank’s loan book, standing at Rs 1.9 lakh crore. 

For the quarter ended June 2024, the lender’s gross advances rose 12% year-on-year to Rs 5,39,123 crore  from Rs 4,79,404 crore a year ago. 

“Apart from our top corporate sectors such as road, NBFC, renewable energy, smart metering and city gas distribution, we have also taken exposure in metal,” Jain said.

Mobilising low-cost CASA (current account savings account) deposits has been a challenge. The bank has started around 100 acquisition centres to bring business from individual and institutional customers, said Jain.

The bank’s net NPA ratio reduced 31 basis points to 0.39% in June 2024, from 0.7% in the year-ago period. The fresh slippages for Q1 FY25 was at Rs 1,928 crore versus Rs 1,753 crore in the year-ago quarter.

On fund raising, Jain said the bank's capital adequacy is 16.47% and with the net profit of Rs 2,403 crore for the April-June 2024 quarter, the capital adequacy ratio is 17.08%.

"Point is, the bank is adequately capitalised. Basically, the bank is able to take care of capital needs. We have board of directors approval, shareholders approval to raise Rs 5,000 crore through equity and Rs 2,000 crore through tier II bonds and Rs 5,000 crore of infra bonds during this financial year," he said.

"That approval is with us and at the opportune time within the financial year we will take a call on this," he added.

The bank plans to open 100 branches in FY25. In the previous fiscal, it added 77 branches.

On RBI’s draft guidelines on liquidity coverage ratio (LCR), Jain said the bank would have an impact of 5% on its LCR of 120%.

The bank has launched its omni-channel banking application INDSMART, which offers a wide range of services including banking services and e-shopping facilities to customers.

This application has several features like integrated bill payment, e-shopping, business planner providing a seamless and enriched experience for customers. Customers would also be able to avail loan facilities or open fixed deposits and savings accounts through the application, he said.

Indian Bank made a business of Rs 36,678 crore through digital channels in the June 2024 quarter. Mobile banking users grew by 33% year-on-year to reach 1.75 crore customers.

UPI users (1.85 crore) and net banking users (1.09 crore) have grown by 30% and 26%, year-on-year, respectively, Jain said.