Government-owned Indian Bank began the new financial year with a strong set of numbers, with first quarter profit showing a 10% jump and net interest income increasing by 17% even as asset quality continues to improve. MD & CEO Binod Kumar spoke with TNIE on factors that helped the bank’s Q1 performance. Excerpts:
Indian Bank reported strong deposit and credit growth despite a challenging operating environment. What drove this performance?
CASA remained our key challenge because the first quarter is usually sluggish due to transfers, promotions and a slower economy. We focused on activating dormant accounts, improving balances in low-activity accounts and providing fintech solutions to government departments, universities and colleges. These solutions generate float balances that stay with us for a few days. We were also disciplined in managing advances and avoided raising expensive bulk deposits when market rates were high. As a result, the average savings account balance increased from ₹25,000 a year ago to ₹53,000, and we added around 60,000 salary accounts during the quarter.
Could you elaborate on these fintech solutions?
We provide digital solutions such as fee collection modules, MIS dashboards, auto-debit facilities and collection accounts. These help institutions manage their finances efficiently while giving us temporary float balances. We have implemented about 217 such fintech solutions.
How did the bank improve balances in savings accounts?
We activated nearly 17 lakh inoperative accounts with balances of around ₹1,649 crore. We have also developed a churn prediction model that identifies accounts likely to become dormant. We proactively contact customers, which has resulted in balances increasing by nearly ₹2,000 crore in these accounts.
Deposit and credit growth were both above 13%. Can this momentum continue?
We achieved this without increasing bulk deposits, which remained at around Rs 1.61 lakh crore. CASA grew by about 15%, while retail term deposits rose around 13%. While CASA growth may moderate to 12-13%, I am confident of maintaining our CASA ratio of around 40%.
What gives you the confidence to sustain CASA levels?
My confidence comes from our people. We are focusing on relationships, salary accounts and float balances. We have significantly expanded POS machines, QR code deployments and FASTag penetration. The average balance in QR-code-linked accounts has increased substantially. Small initiatives collectively make a big difference.
Public sector bank employees often speak about increasing work stress. How are you addressing this?
Stress is largely a mindset. I encourage employees to view work positively. I also ensure a healthy work culture—I normally leave office by 6.30-7 pm and encourage others to do the same. Employees can directly email me with any problems. Most importantly, targets are decided through consensus rather than being imposed, which improves ownership.
How is Indian Bank using artificial intelligence?
We have already implemented six to seven AI use cases. One is an Employee Assist platform, where staff can instantly get answers to operational queries, reducing knowledge gaps and stress. We are also using AI in collections, which has contributed to reducing our SMA portfolio from 7.99% to 4.69%. We are now working on conversational AI that will allow customers to perform banking transactions through voice commands after authentication.
How has the FCNR(B) deposit mobilisation progressed?
We have mobilised around $150 million so far and are targeting $2 billion by September. Although we are not offering the highest interest rates in the market, we already have a pipeline of nearly $1 billion.
What has been the response to the Emergency Credit Line Guarantee Scheme (ECLGS)?
It has been very encouraging. We have already disbursed around ₹5,000 crore under the scheme. A small portion, about ₹150 crore, has gone to SpiceJet, while the rest is largely for MSMEs.
What is the outlook for the Central Bank Digital Currency (CBDC)?
Programmable CBDC has significant potential. It can ensure funds are used only for the intended purpose—for example, purchasing machinery or agricultural inputs. While adoption has been slower because UPI is already very convenient, I believe CBDC will gain traction. At present, our bank records around 40,000-50,000 CBDC transactions every month, and even employee benefits are being disbursed through CBDC.