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Indian Bank's success secret: Innovation

india Updated: Nov 22, 2010 00:15 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The state-owned Indian Bank has reasons to cheer. It has seen a healthy 24% growth in overall business this year. The Chennai-based midsized bank is now focusing on innovation of products to increase its presence and expand its portfolio. Bank's chairman and managing director TM Bhasin spoke to Hindustan Times on its plans and performance.

Your bank has been trying to introduce new products to garner growth. What are these products?
Yes, this year we have been focusing a lot on new products and schemes. We launched the Jewel Loan Scheme in July this year. The scheme is targeted only at senior citizens. It has been taken very well.

What is the scheme all about?
We realised that senior citizens have certain needs and often they are not met because of the age factor and repayment ability. Reverse mortgage scheme - a loan against property given to the elders - is an extremely well thought out scheme but it takes a long time for sanctions. But we at Indian Bank are offering loans to the elders against their jewellery. The sanction time for this is just a day.

What is the average loan size?
The loan size is typically between Rs 15,000 and Rs 5 lakh. We already have a portfolio size of Rs 125 crore. We are targeting Rs 250 crore under the scheme.

Can you elaborate on the financial performance of your bank during second quarter of the current financial year?
The operating profit for the second quarter-ended September 30, 2010 stood at Rs 738.94 crore as against Rs 553.86 crore during the same period last year, recording a growth of 33.42%. Core operating profit excluding trading profit rose by 51.22% to Rs 680.32 crore during the quarter from Rs 449.88 crore in same period last year. Net profit amounted to Rs 415.77 crore as compared to Rs 371.99 crore in the corresponding quarter, registering a growth of 11.77%.

How has been the growth in advances extended to priority sectors such as agriculture?
Priority sector advances grew by 23.79% to reach Rs 24,200.86 crore as on September 30, 2010, constituting 40.69% of adjusted net bank credit. Agriculture advances grew by 24.85% to reach Rs 10,259.12 crore as on September 30, 2010. Under the Special Agricultural Credit Plan, the bank disbursed farm loans to the tune of Rs 3,621.33 crore, against annual target of Rs 6,510 crores, recording 55.63% achievement. During first half of the current financial year, 2,06,076 new farmers were financed amounting to Rs 864.84 crore. Finance to small and marginal farmers were provided to 3,32,585 farmers amounting to Rs 1,683.70 crore which works out to 50.13 % of direct agricultural disbursements.

What measures has the bank taken to spread financial inclusion?
Twenty villages with population above 2000 have been provided with banking services under the financial inclusion plan 2010-12 by opening brick and mortar branch, business correspondents and through mobile branches. In Chittoor district of Andhra Pradesh, Indian Bank is implementing the business correspondent model using smart card technology for payment of wages under the rural employment guarantee programme.

What are the company's recent measures taken up to improve its performance?
The company has taken a concerted view to put in place proper systems to improve quality and implemented an integrated management system in December last year. This comprises of implementation of an environmental.