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CHENNAI: Indian Bank’s FY26 performance reflects a calibrated pivot towards granular deposits and retail-led growth, triggered by a temporary setback in CASA early in the year.
Managing Director Binod Kumar on Wednesday explained how the bank responded to changing customer behaviour, sharpened its deposit strategy and leveraged digital channels to deliver stable growth.
What are the key highlights of FY26 performance?
Our total business grew 12.79 per cent, with deposits up 12.29 per cent and advances 13.43 per cent. CASA improved to 39.67 per cent by March, growing 10.85 per cent.
In June, we saw a jolt in CASA, with the ratio dipping substantially. That prompted a strategic reset. We are cognizant of the structural shift underway.
Financial literacy has improved and customers are increasingly behaving like investors rather than pure savers. We have to accept that and adapt.
So, instead of relying on bulk deposits, we focused on granular sources. Our strategy centred on salary accounts and transaction float. We opened over 3 lakh salary accounts during the year, which also supports cross-selling.
At the same time, we scaled up our payments ecosystem by deploying 3.84 lakh QR codes, which generated around Rs 7,800 crore in deposits through float balances. At scale, these flows meaningfully strengthen CASA.
Beyond new acquisition, how did you mobilise deposits from existing customers?
We focused on reactivating relationships. In the last quarter alone, we activated about 34 lakh inoperative accounts, bringing in Rs 4,685 crore. These are existing customers, so re-engagement is an efficient way to mobilise low-cost deposits.
We also worked on changing internal orientation. Government deposits are only about 20 per cent of our base, while individuals account for nearly 60 per cent. So, we pushed teams to focus on individual customers instead of waiting for bulk deposits. Along with digital and fintech-led solutions, this has helped rebuild CASA steadily.
What drove the improvement in CASA and RAM segments?
The shift to granular deposits (salary accounts, QR-led float and account reactivation) was key. On advances, retail growth was led by housing (around 14.5 per cent) and vehicle loans (40 per cent), while MSME growth improved significantly across segments.
Which sectors are seeing strong credit demand?
We are seeing traction in green-linked sectors such as data centres and in healthcare, especially hospitals in tier-II and tier-III cities. MSME demand remains broad-based.
Is there any stress in MSME?
There is some stress, but it is not alarming. We have made prudent provisions of about Rs 310 crore as a buffer.
What is your FY27 outlook and key challenges?
We expect growth momentum to continue, with deposit growth of 9 to 11 per cent and advances at 11 to 13 per cent. Recoveries will moderate due to a shrinking pool, and treasury income may face pressure.
What is your NIM guidance?
We expect NIM in the range of 3.10 to 3.25 per cent, with some pressure from deposit costs.
What about risk, technology and expansion?
We are strengthening cybersecurity teams, hiring AI experts, and working with technology partners to address vulnerabilities. AI will play a key role in managing emerging risks.
On gold loans, we remain cautious. Branch expansion is on track, with around 100 branches to be added annually.