Friday, February 21, 2025

Indian Bank plans MSME portfolio growth, digital expansion and a next-gen call centre

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Public sector lender Indian Bank has outlined key priority areas for the next three years while maintaining stable growth and improvement across all parameters. The Chennai-headquartered bank’s priorities include increasing digital adoption on the liability side and raising the MSME share in its loan portfolio from 17 per cent to 20 per cent.

“The bank has been performing well, which shows that our current strategy is working. We will continue with this approach to maintain stability, but I see a few areas to focus on,” said Binod Kumar, MD and CEO of Indian Bank, in his first exclusive media interaction with businessline since taking charge on January 16, 2025.

Going digital

He said that over the past two to three years, the bank made significant strides in the digital space, particularly in capacity building. “While digital adoption is typically higher on the liability side, we have seen it being more prominent on the asset side. Going forward, we will focus on improving digital adoption for liability products as well. Currently, 92 per cent of our transactions are conducted through digital channels… And I aim to see this figure rise to 95 per cent in the next two to three years,” he added.

The bank is also working on launching a next-generation call centre. Although this may take some time, it will be an important step in strengthening customer service, allowing the bank to address grievances more efficiently and reducing the need for escalation to branches. Amid the push for digital adoption, the Indian Bank has sanctioned over ₹2 lakh crore through digital channels in the past couple of years, with digital adoption in the RAM sector (retail, agriculture and MSME) around 70 per cent, a significant share.

GST-linked loans

Regarding MSMEs, Kumar said the bank is revising its approach. “The biggest challenge for MSMEs is that when banks require multiple documents, they often don’t have the understanding or resources to meet these requirements. We are working on eliminating paperwork wherever possible.” For example, the bank has developed a product based on GST data, allowing it to assess how much GST an MSME is paying and set a loan limit based on that. Additionally, the bank has introduced a pre-approved business loan of up to ₹10 lakh and is developing a straight-through processing (STP) system so that MSMEs can apply for loans online without visiting a branch.

In the past year alone, Indian Bank has disbursed loans to around 5,000 MSMEs through the GST-linked product. The bank also aims to reach 7,000 MSMEs by March, focusing on a cluster-based approach targeting specific business sectors. The number of mid-corporate branches has increased from 17 to 31, and two MSME-specialised branches have been opened, with plans to add eight more soon.

Indian Bank has identified 10-15 MSME clusters across India, starting with 10-12 and potentially expanding further. “Our goal is to increase the MSME share of our portfolio from 17 per cent to 20 per cent over the next 2-3 years, driven by our cluster-based strategy, specialised branches, and other initiatives,” Kumar added.







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