Monday, February 3, 2025

IOB mops up ₹17,000 cr fresh CASA business, targets ₹5,500 cr NPA Recovery for FY25

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Indian Overseas Bank (IOB), a public sector lender, has successfully mobilised a substantial ₹17,000 crore in fresh CASA (current account and savings account) business over the past 21 months through the onboarding of over 50 lakh new customers. This achievement follows a strategic overhaul of its deposit portfolio, a move that has paid off handsomely.

Ajay Kumar Srivastava, Managing Director and CEO of IOB, explained the bank’s approach, and said, “We chose not to aggressively pursue bulk deposits as part of our strategy, allowing them to naturally roll off. Instead, we focused on CASA and retail term deposits, which are more sustainable and cost-effective in the long run.”

As part of its expanded CASA strategy, the bank has been aggressively onboarding new customers. In FY24, IOB added 25 lakh new CASA customers, with another 27 lakh customers added in the first nine months of FY25.

Focus on tier 2, 3 cities

Srivastava highlighted that the bank’s CASA growth has been driven by a focus on cluster-based strategies and targeting tier-2 and tier-3 cities. “Our branches, strategically distributed across the country, have played a key role in driving this,” he stated.

The surge in CASA has significantly strengthened IOB’s deposit base, allowing the bank to maintain a CASA ratio consistently above 42 per cent. By the end of December 2024, the ratio reached an impressive 43.37 per cent.

“The sustained momentum of our efforts over the past 21 months underscores the effectiveness of our strategies,” Srivastava said. “We are confident that this will continue to drive robust CASA growth. Importantly, this strategy has not impacted our advances, and our lending operations remain strong.”

Term deposits

In terms of term deposit growth, IOB reported a 9.96 per cent year-on-year increase for the December 2024 quarter. However, on a quarter-on-quarter basis, there was a decline of 3.36 per cent. This reduction is largely attributed to the bank’s strategic decision to release high-cost bulk deposits and certificates of deposits, a calculated business move aimed at better cost management. Retail term deposits, on the other hand, grew by 8 per cent in Q3FY25, reflecting positive traction. Bulk deposits now account for only 4-5 per cent of the bank’s total deposits, standing at around ₹16,000 crore as of December 2024.

In addition to its focus on deposits, IOB is targeting aggressive recoveries from non-performing asset (NPA) accounts. For FY25, IOB has set a recovery target of ₹5,500 crore. With ₹3,021 crore already recovered, the bank expects to achieve the remaining ₹2,500 crore in the fourth quarter. While the December quarter did not see any major recoveries from NCLT-admitted accounts, Srivastava remains optimistic. “Although we cannot disclose specifics, we anticipate 1-2 large recoveries in this quarter. We are confident of exceeding our recovery target of ₹5,500 crore for the fiscal year,” he added.







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