Indian Bank On Track To Reduce Bad Loans With Improved Recovery, Says CEO Shanti Lal Jain

Indian Bank is on track to reduce its non-performing assets in the upcoming quarters of the current financial year on the back of improved recovery, according to Managing Director and Chief Executive Officer, Shanti Lal Jain.

He told NDTV Profit, “We talk about two things with regard to asset quality. We always say our recovery will be more than our slippage, due to which our gross NPA may come down. So our recovery last year was Rs 8,700 crore and slippage was Rs 6,600 crore."

Jain pointed out, "In the current half year too, Rs 3,958 crore is the recovery and Rs 3,200 crore is slippage. So, recovery is more than slippage.”

Going forward, there will be further reductions in the gross NPAs of the bank on improved recovery and reduction in slippage rate, assured the top executive.

In the September quarter of the current fiscal, the bank's gross NPAs decreased by 149 basis points year-on-year to 3.48% against 4.97% in the year-ago quarter. The lender's net NPA reduced by 33 bps to 0.27% in the second quarter of FY25 against 0.6% in the corresponding period a year ago.

In the quarter under review, the public sector lender's GNPAs dropped to Rs 20,302 crore against Rs 24,488 crore in the same period of the preceding financial year.

The bank was also able to contain its slippage ratio at 1.06% in the second quarter of FY25, compared to 1.77% in the same quarter of the preceding financial year.

“So, in the beginning we said our gross NPA should be around 3%. From the 3.77% in June, we brought it to around 3.48%. Going forward, there will be further reduction. Net NPA is at 0.27%. So, only Rs 1,400 crore in net NPA,” he said.

Jain pointed out that in the quarter ended September, the bank's slippage had reduced. “For Q2, the slippage was at about Rs 1,357 crore against Rs 1,900 crore in the previous quarter. It has come down by around 1%. Half of it is coming from the agri book—around Rs 600 crore. Slowly, it is coming down,” he said.

Reassuring that there will be further reduction in slippages going forward, the top executive said, “We are maintaining collection efficiency at 95%. If you are maintaining your collection efficiency naturally there will be a reduction in slippage. Going forward it will come down. Our credit cost is also coming down.”

The lender, which had posted its Q2 results on Monday, reported that its net interest income rose 8% YoY to Rs 6,194 crore compared to Rs 5,741 crore in the year-ago quarter. The bank's net profit surged 36% YoY to Rs 2,707 crore in Q2 against Rs 1,988 crore in the year-ago period.

Shares of Indian Bank Ltd. ended 4.81% higher at Rs 578 apiece on the NSE on Tuesday, compared to the benchmark Nifty 50 that closed 127.7 points, or 0.52%, higher at 24,466.85.