Optimistic about achieving 10-12% credit growth for FY26: Indian Bank MD Binod Kumar
Chennai-based Indian Bank is optimistic about achieving its credit growth target of 10-12% for the financial year 2026.
'Overall, at the industry level, there is a concern of a slowdown in credit growth,' Binod Kumar, Managing Director & CEO of Indian Bank said in an interview. 'Credit growth slowdown is on two or three counts. One is retail — where slowdown is primarily because of unsecured lending and credit cards, where we don't have much exposure,'
'We remain optimistic about achieving our 10-12% credit growth target for the financial year 2026, supported by an improving macro environment, expected policy rate cuts, and stronger retail and MSME credit demand,' he said.
Our Retail and MSME book grew by 14% and 12% respectively last year, and we aim to sustain that momentum, Mr. Kumar said.
He said Indian Bank is focusing on home loans, cluster-based MSME lending and supply chain financing which brought in ₹ 1,300 crore business last year.
On the corporate side, we're focusing on champion sectors such as data centres, chemicals, engineering, electric vehicle, oil & gas, and renewable energy. With steady economic momentum and supportive regulations, we expect our growth to align well with industry trends, Mr. Kumar said.
'On the corporate side we are seeing demand for brownfield expansion and not much for greenfield expansion. Also big companies are meeting their funding needs from their internal accruals and in case of term loans the disbursement is only 20-30% when compared to the sanctioned amount. So firms have been conservative in taking loans from banks,' he said.
Mr. Kumar said the bank will also focus on sectors like smart metering, city gas distribution.
He said the two interest rate cuts by the Reserve Bank of India (RBI) and also expectations of further cuts is likely to spur credit demand.
'Many postponed their projects due to higher interest rates. Also the rate cuts will increase the credit demand from retail, especially in segments like home loans,' he said.
On the deposits front, Mr. Kumar pointed out that current account and savings account (CASA) deposits have been a concern for all banks, with growth being flat.
'The term deposits of up to ₹ 3 crore is growing 9-10%. The rate difference between savings and term deposits is over 4.5%. With the rate cuts that differential benefit won't be there,' he said.
'We sustained a CASA ratio above 40% in the last financial year. To strengthen our deposit base further, we're increasing our Resource Acquisition Centres (RACS) with an additional 25 RACs planned in this fiscal. We're also introducing innovative deposit products like green deposits, floating-rate FDs, and auto-sweep facilities to attract diverse customer segments. Going forward, we believe personalized engagement through digital adoption will be key to sustaining CASA and driving deposit growth in a competitive landscape,' Mr. Kumar said.
Additionally, recent tax measures in the Union Budget are expected to support deposit mobilisation, he added.
On the Supreme Court verdict directing liquidation of Bhushan Power and Steel (BPSL) and terminating the earlier resolution plan of JSW Steel, Mr. Kumar said the bank is on a wait and watch mode and will take appropriate steps in co-ordination with Committee of Creditors to safeguard its interest and maximise recoveries. The bank had an exposure of ₹2,618.34 crore in BPSL as on December 31, 2020 and recovered ₹1,265.87 crore via resolution plan.
He said RBI's liquidity measures have been helpful and the impact is visible on the bulk deposit side where there is a reduction in rate by 60-70 basis points.
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