Subdued growth in corporate loan uptake is primarily due to fewer new projects being launched, rather than any reluctance by banks to lend to corporates. Indian Bank Managing Director and CEO Binod Kumar told TNIE that the issue behind slower corporate loan growth is weak demand.
“There are fewer new projects coming up in sectors like cement and other core industries. Demand is visible in sectors like data centres and green energy. Road projects had driven capex over the past few years, but even that has slowed recently,” Kumar said in an interaction with TNIE.
Indian Bank reported a 19% growth in retail loan uptake, while corporate loans grew by 9.19% in the fourth quarter—an improvement over 3% growth in the same period last year. Kumar also attributed the slower corporate loan growth to corporates increasingly relying on internal accruals and equity funding.
“Bond markets have also been active, so bank credit demand from corporates is relatively lower,” he said.
For the bank, corporate loans account for 34% of its total loan book, followed by agriculture at 25%, retail at 23%, and MSMEs at 18%.
Credit growth outpaced deposit growth in the fourth quarter, with credit growing by 13.43% and deposits by 12.29%. The bank expects deposits to grow at 9–11% and advances at 11–13% in FY27.
According to Kumar, CASA (current and savings account) deposits, which formed 39.67% of the bank’s total deposits at the end of FY26, are expected to remain around 40% in FY27.
Kumar noted that maintaining a 40% CASA ratio is becoming increasingly challenging due to a structural shift in customer behaviour. “People now prefer investing in mutual funds or other instruments rather than keeping idle balances in savings accounts,” he said. To address this, the bank is focusing on salary accounts and transaction-based accounts, where balances remain for shorter periods but still provide some float.
The bank’s average cost of deposits has declined from 5.12% in FY25 to 4.98% in FY26. However, Kumar said there is little room for further reduction. “Credit growth continues to outpace deposit growth, leading to intense competition for deposits. If this trend continues, deposit rates may actually harden rather than soften,” he said.
When asked about the impact of the RBI’s curbs on rupee derivatives exposure, Kumar said the bank had already wound down most of its exposure before the central bank’s circular. “Our exposure was below $100 million. Also, since the RBI has provided some relaxation, we do not see any impact on operations,” he added.