CHENNAI: Public sector lender Indian Bank on Thursday said it is planning to slowly shift focus from the corporate sector to the risk-prone agriculture, retail and MSME (RAM) industries.
“Agriculture as a sector may be risk-prone, but the returns are way higher than the returns from corporates. We get nearly 2 per cent more than the standard 7.8 per cent. 1.5 per cent comes from Central government subsidies and about 50 bps from Basel,” said an executive during an event held in Chennai on Thursday.
“We are actually becoming risk averse by diversifying into the RAM sector which has seen a growth of 26.12 per cent this year,” he added.
The lender, however, reported a 59 per cent decline in net profit for the fourth quarter ended March 31, due to the hardening of the bond yields and as provisions for bad loans more than doubled.
For the fourth quarter, the bank’s provisions and contingencies stood at Rs 1,546.33 crore, more than double from Rs 806.91 crore in the year-ago period.
However, Indian Bank’s gross non-performing assets (NPA) were at Rs 11,990.14 crore as of March 31, up from Rs 9,865.13 crore in the year-ago period. The company also said that it would have achieved its 3 per cent NPA target this year if not for the bond yields and the issuance of stricter NPA norms by the Reserve Bank of India in February this year.
The company also said it has seen a reduction of Rs 2000 crores in stressed assets during the year due to the recovery of the steel sector and growth from the automobile industry.