Indian bank seeks grand turnaround

chennai/mumbai — The new head of Indian Overseas Bank says he plans to get a grip on the bank’s bad-loan problems as he embarks on a series of cost-cutting measures.

The Chennai-based lender, which has the country’s highest bad-debt ratio, has closed more than 20 of its 3,000-plus branches this year and has identified more to be shut, chief executive officer R. Subramaniakumar said in an interview last week, about two months after taking office.

He signalled his intention to restore the fortunes of a stateowned bank that was left without a CEO for almost a year after former head R. Koteeswaran retired on June 30, 2016, a period during which bad debt soared and loan growth sputtered. The government only named Subramaniakumar as CEO in May, after various legal processes delayed the appointment, for a term that ends in June 2019. “You will see a much stronger bank before I step down,” the 58-year-old said, noting he has about two years before his retirement.

Indian Overseas Bank’s shares have dropped 10 per cent in the past year, while the S&P BSE 500 Index gained 21 per cent.

Souring corporate loans drove the firm’s bad-debt ratio to 22.4 per cent as of March 31, versus 17.4 per cent a year earlier and an average of 9.6 per cent for the banking system, central bank data show. Indian Overseas Bank reported five straight quarters of losses through March as its outstanding loans fell to ₹1.57 trillion from ₹1.7 trillion a year earlier, exchange filings show.

In another cost-saving measure, the bank has automated the entire loan process for its retail customers from application through to the disbursal of the funds, the CEO said. — Bloomberg