Indian Bank has raised its FY27 guidance for advances and deposits after stronger-than-expected first-half growth, while preparing for a projected Rs 3,500 crore impact from the RBI’s expected credit loss framework.
Indian Bank has lifted its growth ambitions for the next financial year after a stronger-than-expected first half, with management now guiding for advances to rise by 13% to 14% and deposits by 11% to 12%. Binod Kumar, the lender’s managing director and chief executive, said the revised targets reflected the momentum built over the past two quarters, after the state-backed bank had previously guided to deposit growth of 9% to 11% and loan growth of 11% to 13%.
The Chennai-based lender reported gross advances of Rs 7.22 trillion in the July-September quarter, up 16% from a year earlier, while deposits climbed 12.5% to Rs 8.7 trillion. Consolidated net profit for the second quarter rose 14% to Rs 3,540 crore, according to the bank’s earnings update, underscoring the benefit of stronger business volumes and a healthier funding base.
Indian Bank is also preparing for the Reserve Bank of India’s move to the expected credit loss framework from 1 April 2027. The new system, which is intended to bring domestic bank provisioning closer to global IFRS 9 standards, will require lenders to recognise credit risk on a forward-looking basis rather than relying mainly on past losses. Kumar said the bank estimates the eventual hit from the transition at about Rs 3,500 crore, of which Rs 2,500 crore has already been provided through earlier set-asides and a further Rs 1,000 crore is due over the next two quarters.
Kumar told Business Standard that the bank plans to begin a parallel trial run using September data by December, part of an effort to smooth the shift to the new accounting regime. The lender said it had already booked Rs 1,500 crore towards the new framework in the September quarter, in addition to Rs 1,000 crore set aside last year.
Deposit mobilisation has been helped by a push into salary accounts, floating balances and fintech-linked deposits. Indian Bank said it added 2.5 lakh salary accounts in the first half of the fiscal year, helping lift average salary account balances to Rs 6,100 crore from Rs 4,700 crore a year earlier. The bank also said it won 23 new customers for fintech solutions in the second quarter alone, bringing in about Rs 5,000 crore in current and savings account deposits.
Overseas funding has played a role as well. The bank said it mobilised about $2.3 billion through foreign currency non-resident deposits and a further $400 million through overseas foreign-currency borrowings by the end of the quarter. Kumar said the lender has already deployed the money raised through those channels, adding that such attractive pricing may not be available for long.
The stronger outlook comes as Indian Bank continues to invest in technology and distribution. The lender has set aside Rs 2,000 crore for technology spending this financial year, including Rs 65 crore for artificial intelligence initiatives, and has issued a request for proposal for an AI-based platform. It is also planning to appoint a dedicated AI consultant. Separately, LiveMint reported that the bank is looking to open 100 branches this financial year, with an emphasis on western and central India, while Moneycontrol reported that Kumar sees a modest improvement in net interest margins after the Reserve Bank’s recent 25-basis-point policy rate increase.
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