‘Our business should be around ~11 trn by 2022 from ~9 trn now’
Allahabad Bank was amalgamated with Chennai-based Indian Bank on April 1. Indian Bank Managing Director and Chief Executive Officer PADMAJA CHUNDURU tells T E Narasimhan on how the combined entity is looking at increasing the books to over ~11 trillion and enhancing profitability. Edited excerpts:
It’s been more than five months. How is the amalgamation process going through?
Treasury operations have been fully integrated. Harmonised products, interest rates, and service charges have been made available to customers of the amalgamated entity. A Common Gateway Software (Co-ex) is being used to provide an interface to the two CBSS (common business systems). The integration of HR data in SAP (systems, applications, products) has been completed. Work on CBS integration is in full swing. Of the 100 branches planned for merger this financial year, 75 are through. The bank has operationalised 79 retail and MSME (micro, small, and medium enterprises) processing centres and 18 mid-corporate branches. All the executives and officials who have been transferred have assumed responsibilities at new places.
How challenging was it in the backdrop of the pandemic?
The bank faced some challenges in the form of travel restrictions after lockdown. The pandemic has opened the path for enhanced digitisation, including internal and external meetings. We are able to see tangible benefits in the form of savings in time, travel, and other administrative costs.
After amalgamation how has market coverage increased? Any impact on performance?
The performance of the bank in the first quarter was satisfactory despite pandemic challenges. All the key parameters —business, profitability, asset quality, and capital adequacy — were good.
With the merger, the network of the amalgamated entity has a pan-indian presence with potential for deepening it, especially in northern and western regions, where Indian Bank’s penetration and business doubled after amalgamation.
What next for the amalgamated entity? The target for the next three-five years?
The focus would be to consolidate the amalgamation by merging branches and opening fresh ones in centres where the bank does not have a presence. This will lead to cost rationalisation, besides redeploying staff. The bank also expects to stabilise the initiatives taken for centralising the various processes, which will help the front line staff to focus on deepening existing relationship and bringing in new businesses.
By 2022, our business should be around ~11 trillion from the current ~8.5-9 trillion. While we are seventh in terms of size, and second or third in terms of asset quality and profitability. The bank’s capital adequacy ratio is 13.45 per cent now as against the required 10.875 per cent. With the existing capital, there is no constraint on the bank’s growth for the next two years.
On restructuring loans, how many proposals have come up in retail, MSMES, and corporate debt?
Restructuring requests are coming in a trickle. Right now we have received requests for about ~3,800 crore of debt spread across various verticals, where the borrower exposure is more than ~1,500 crore.