Indian Bank raises FY27 growth guidance, plans 100 branches; CEO sees recoveries exceeding target

New Delhi: State-owned Indian Bank has increased its loan and deposit growth targets for fiscal year 2027 (FY27) after reporting strong business growth in the first half of the year, managing director and chief executive officer Binod Kumar said in an interview with Mint on Sunday.

The bank also expects to recover more money from bad loans than initially targeted, and open 100 branches this financial year, with a focus on western and central India.

“The bank has raised its deposit growth guidance to 11-12% from 9-11% earlier, while its advance growth guidance has been increased to 13-14% from 11-13%,” Kumar said.

The revised outlook comes as the bank reported a 12.5% year-on-year increase in deposits to ₹8.74 trillion and a 16.39% year-on-year increase in advances to ₹7.22 trillion as of 30 September, according to its Q2 FY27 investor presentation. Its total business rose 14.22% to ₹15.96 trillion.

The lender’s net profit increased 14.71% year-on-year to ₹3,462 crore in the September quarter, while net interest income rose 17.83% to ₹7,719 crore. Operating profit grew 46.58% to ₹7,090 crore.

Kumar said the bank expects demand across retail lending to remain healthy, despite changes in interest rates. Retail advances grew 17.37% year-on-year to ₹1.53 trillion, agriculture advances rose 17.18% to ₹1.71 trillion, and micro, small and medium enterprises (MSME) lending expanded 19.06% to ₹1.18 trillion.

The bank expects agriculture growth to remain at a similar level and has not seen a significant rise in stress in the segment, Kumar said. Its special mention accounts book has declined, while stress in the MSME portfolio has also eased, he added.

The bank’s reported asset quality improved during the quarter. Gross non-performing assets (GNPAs) declined to 1.61% of advances as of 30 September, from 2.60% a year earlier, while net NPAs fell to 0.14% from 0.16%, according to the investor presentation.

On provisioning, Kumar said the bank’s expected credit loss (ECL) provisioning requirement would be around ₹3,500 crore. It had already made provisions of ₹1,000 crore in the previous quarter and ₹1,500 crore in the September quarter, taking the total to ₹2,500 crore.

The bank has recovered around ₹3,400 crore so far in FY27 against its annual recovery guidance of ₹4,500-5,500 crore and expects to exceed the target, Kumar said. The bank's recoveries are coming from many accounts, not just National Company Law Tribunal (NCLT)-led resolutions, he added.

On overseas funding, Kumar said the bank had mobilised around $2.3 billion through foreign currency non-resident (FCNR) deposits and $400 million through overseas foreign-currency borrowings as of 30 September. The FCNR window has closed, while the overseas borrowing window remains open, though the bank will pursue further borrowing only if rates are favourable.

The bank has also raised around $500 million through external commercial borrowings (ECBs) and expects to raise another $500 million by December, including $150 million in the near term. Kumar said the funds had been deployed in dollars, with dollar-denominated earnings helping meet the interest payable.

Indian Bank plans to open 100 branches in FY27, matching the previous year’s addition. Its expansion will focus on western and central India, including Madhya Pradesh and Rajasthan, Kumar said.

The bank has received board approval to raise capital through various bond issuances. It may raise ₹2,000 crore through Tier 2 bonds if market conditions are favourable, while ₹1,000 crore of Tier 1 bonds are set to mature in January. Infrastructure bonds will be considered if rates are favourable, he said.

On the proposed merchant discount rate (MDR) for certain UPI transactions, Kumar said the impact on banks was unlikely to be significant. Consumer behaviour would depend on the convenience and cost of digital payments compared with withdrawing cash from automated teller machines (ATMs), he said.

• Indian Bank significantly raised its FY27 loan and deposit growth targets.
• Strong demand in retail, agriculture, and MSMEs continues to support business growth.
• Asset quality improved sharply, with lower overall bad-loan ratios.
• Recoveries from stressed assets are likely to exceed annual targets.
• The bank plans 100 branches focused on western and central markets.

Harsh Kumar is a policy reporter at Mint (HT Media Group), where he covers the Ministry of Commerce and Industry along with key departments of the Ministry of Finance, including the Department of Economic Affairs (DEA) and the Department of Financial Services (DFS). With over five years of experience in business and economic journalism, he has developed strong expertise in tracking policy developments and their wider economic impact.<br><br>He has previously worked with Business Standard, Moneycontrol, and Outlook Money, where he reported extensively on banking, financial services, and the broader economy. Over the years, he has built a reputation for delivering accurate, insightful, and impactful stories, supported by a keen eye for detail and a consistent track record of breaking exclusive news.<br><br>An alumnus of Jamia Millia Islamia, Harsh closely follows regulatory changes and key economic trends shaping India’s financial and industrial landscape. His reporting aims to simplify complex policy issues for a wider audience while maintaining depth and credibility.<br><br>Outside of work, he enjoys tracking policy developments, finding scoops, and travelling, reflecting his curiosity about how economic decisions shape everyday life.

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