CHENNAI: Chennai-based Indian Bank has been reducing its exposure to the infrastructure sector to cut down concentration risk.
Infrastructure loans, which contributed 16% of its loan book, have now come down to 12% as of the second half of the current financial year (FY24), according to an investor presentation by the bank.
The bank’s total domestic outstanding to the infrastructure sector consisting of power, port and road and other infrastructure projects, from Rs 60,849 crores (16%) to Rs 55,999 crores (12%) in the first half of the current 2023-24 financial year.
Between the financial year 2020-21 (FY21) to 2023-24 (FY24) the share of the power sector came down 4% from 5%, ports and roads to 3% from 4% and other infrastructure projects down to 6% from the 8%.
Exposure to the retail loans (home, auto and other personal loans) has, however, jumped from 18% in FY21 to 21% in the first half of FY24. Loans to the agriculture sector now account for 24% of the bank’s loan book, up from 21% in FY21. Commercial real estate exposure doubled to 4% in the same time. The bank would also identify sectors under stress and implement a sector-specific approach to minimise delinquency, it said.
Non-performing assets (NPAs) in the retail credit have gone down from 4.1% in FY21 to 2.8% in H1 FY24, agriculture bad loans came down from 11.1% to 8.2%, corporate and overseas NPA was down from 10.6% to 1.5%, according to the investor presentation.
NPAs in loans to MSMEs stood at 12.1% by the end of the first half of the current financial year The Chennai-based bank has said its key growth strategies would focus on retail, agriculture and medium, small and micro enterprises (MSME) segment, through specialised branches and on boarded new corporate direct selling agents for mortgage based loans. It has also opened resource acquisition centers for enhancing current and savings account deposits.