indian bank_companyanalysis7687888989.docx

7/29/2019 Indian Bank_CompanyAnalysis7687888989.docx

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Company Analysis Indian Bank

Banking Industry Trends: Banking industry constitutes of retail banking, investment and

corporate banking and asset and wealth management. Europe has highest market share,contributing to 43% of global banking industry. Retail banking industry grew significantly in

period 2006-11, wherein Asia Pacific banking industry grew much faster than both the

European and North American regions. Asia pacific region with massive unbanked

population in India and China offers immense opportunity for banking companies.

Europe's crisis and the large government budget deficit in the US are expected to reduce

government spending, resulting in sluggish short-term economic growth in both regions.

Growing middle class populations and growing household incomes in emerging markets

provide substantial opportunity for global banks. Technological advances are leading to

dramatic shifts in the banking industry as the processing cost per transaction is approaching

zero while simultaneously improving efficiency. These advantages are likely to increase

trading volumes at the institutional level.

Recent Developments in India: The RBI has taken a few important steps to make the Indian

Banking industry more robust and healthy. This includes de-regulation of savings rate,

guidelines for new banking licenses and implementation of Basel Norm III. Since March

2002, Bankex (Index tracking the performance of leading banking sector stocks) has grown at

a compounded annual rate of about 31%. After a very successful decade, a new era has

started for the Indian Banking Industry. According to a Mckinsey report, the Indian banking

sector is heading towards being a high-performing sector.

According to an IBA-FICCI-BCG report titled Being five star in productivityroad map for

excellence in Indian banking, Indias gross domestic product (GDP) growth will make the

Indian banking industry the third largest in the world by 2025. According to the report, the

domestic banking industry is set for an exponential growth in coming years with its assets

size poised to touch USD 28,500 billion by the turn of the 2025 from the current asset size of

USD 1,350 billion (2010). So, before going in its future, lets have a glance at its historical

performance.

PEST Analysis of Banking Industry:

Political factors:Some of the major political factors affecting the Banking industry are : Focus on regulation of government

Budget and budget measures

Foreign Direct Investment limits

Indian banking sector is least affected as compared to other developed countries- thanks to

robust policy framework of RBI.Government affects the performance of banking sector most

by legislature and framing policy. Government through its budget affects the banking

activities. Securitization act has given more power to banking sector against defaultingborrowers. Stricter prudential regulations with respect to capital and liquidity gives India an


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advantage in terms of credibility over other countries. The move to increase Foreign Direct

Investment FDI limits to 49 % from 20% per cent during the first quarter of this fiscal came

as a welcome announcement to foreign players wanting to get a foot hold in the Indian

Markets by investing in willing Indian partners who are starved of net worth to meet CAR

norms.

The move to increase Foreign Direct Investment FDI limits to 49 percent from 20 percent

during the first quarter of this fiscal came as a welcome announcement to foreign players

wanting to get a foot hold in the Indian Markets by investing in willing Indian partners who

are starved of net worth to meet CAR norms.

Economic Factors:

Every year RBI declares its 6 monthly policies and accordingly the various measures and

rates are implemented which has an impact on the banking sector. The Economic measures

affects the banking sector to boost the economy by giving certain concessions or facilities. If

the savings are encouraged, then more deposits will be attracted towards the banks and in

turn they can lend more money to the agricultural sector and industrial sector, therefore,

booming the economy.If the FDI limits are relaxed, then more FDI are brought in India

through banking channels

In past 27 months RBI has changed its key monetary rates many times to curb inflation and

other economic risks.

Social Factors:Before the birth of the banks, people of India were used to borrow money local

moneylenders, shahukars, shroffs. They were used to charge higher interest and also

mortgage land and house. But after emergence of banks attitude of people was changed and

they have started lending from the banks. Life style of India is changing rapidly. They are

demanding high class products. They have become more advanced. Peoples needs and wants

are increasing day by day. And this has this has opened opportunities for banking sector to

tap this change. This has made things available easily to everyone.

Increase in population is one of the important factor, which affect the private sector banks.

Banks would open their branches after looking into the population demographics of the area.

Newer branches are coming to serve the increasing population. This incentive to banks comes

on the back of the continuing need to open more branches in these States in order to ensure

more uniform spatial distribution.

Literacy rate in India is very low compared to developed countries. Illiterate people hesitate

to transact with banks. So, this impacts negatively on banks. But there is positive side of this

as well i.e. illiterate people trust more on banks to deposit their money, they do not have

market information. Opportunities in stocks or mutual funds.


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Technological Factors: Technology plays a very important role in banks internal control

mechanisms as well as services offered by them. Through the use of technology new products

and service are introduced. It include technological aspects such

as R&D activity, automation, technology incentives and the rate of technological change.

Some of the technological changes which brought radical changes in banking industry aredescribed below :

1. The latest developments in terms of technology in computer and telecommunication

have encouraged the bankers to change the concept of branch banking to anywhere

banking. The use of ATM and Internet banking has allowed anytime, anywhere

banking facilities.

2. Automatic voice recorders now answer simple queries, currency accounting machines

makes the job easier and self-service counters are now encouraged.

3. Credit card facility has encouraged an era of cashless society. The banks have now

started issuing smartcards or debit cards to be used for making payments. These are

also called as electronic purse.

4. Today banks are also using SMS and Internet as major tool of promotions and giving

great utility to its customers. For example SMS functions through simple text

messages sent from your mobile

Technology advancement has changed the face of traditional banking systems. Technology

advancement has offer 24X7 banking even giving faster and secured service.

SWOT Analysis of Indian Banking Industry:

Strengths:

High standard regulatory environment. The policy makers, which comprise theReserve Bank of India (RBI), Ministry of Finance and related overnment and

financial sector regulatory entities, have made several notable efforts to

improve regulation in the sector.

Bank lending has been a significant driver of GDP growth and employment

Presence of more number of Smaller banks that would likely to be impacted

adversely.

Approximately 53000 networks of branches spread all over the country provides easyaccess to entire spectrum of customers.

Diversification in their operationsBanks offer an entire gamut of services including

insurance, investment banking, asset management, private equity, foreign exchange,

payment of utility bills to customers, mobile and internet banking.

Large manpower with relevant banking skills to manage the operations.


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Technological up gradation changing the way the banking is done. Anywhere banking

and anytime banking has become a reality and thus making service faster, error free

and competitive.

Banks have gained financial strengths in terms of Productivity and Profitability.

Weakness:

Indian commercial banks, particularly PSBs have been witnessing the following challenges

which have become bottlenecks in achieving competitive edge over their rivals.

Low operating size

High operating costs

Inadequate deposit mobilization efforts

High level of nonperforming assets

Financial exclusion

Complex and non-responsive organizational structures

Credit to non-productive sectors like commercial estate

Poor customer service

Underutilized capacity particularly in rural areas

Unsatisfactory work culture

Feudalistic attitude of thee staff

Ethnocentric and action flippant management

Absence of organizational focus on the employees leading to their de motivation Inadequate access to global financial system

The cost of banking intermediation in India is higher and bank penetration is far lower

than in other markets

Inadequate risk management skills particularly to cope with market risks and per

Basel II norms

Structural weaknesses such as a fragmented industry structure, restrictions on capital

availability and deployment, lack of institutional support infrastructure, restrictive

labour laws, weak corporate governance and ineffective regulations beyond

Scheduled Commercial Banks (SCBs)

The inability of bank managements (with some notable exceptions) to improve capital

allocation, increase the productivity of their service platforms and improve the

performance ethic in their organisations could seriously affect future performance.

Opportunities:

The market is seeing discontinuous growth driven by new products and services that

include opportunities in credit cards, consumer finance and wealth management on

the retail side, and in fee-based income and investment banking on the wholesale

banking side. These require new skills in sales & marketing, credit and operations.


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With increased interest in India, competition from foreign banks will only intensify.

Given the demographic shifts resulting from changes in age profile and household

income, consumers will increasingly demand enhanced institutional capabilities and

service levels from banks.

New private banks could reach the next level of their growth in the Indian banking

sector by continuing to innovate and develop differentiated business models to

profitably serve segments like the rural/low income and affluent/HNI segments;

actively adopting acquisitions as a means to grow and reaching the next level of

performance in their service platforms. Attracting, developing and retaining more

leadership capacity

Reach in rural India for the private sector and foreign banks.

Large unbanked population which the industry can explore.

With growth in SMEs, the opportunities for lending and making profits is huge.

Threats:

Competition among banks for highly rated corporates needing lower amount of

capital may exert pressure on already thinning interest spread. Further, huge

implementation cost may also impact profitability for smaller banks.

The biggest challenge is the re-structuring of the assets of some of the banks as it

would be a tedious process, since most of the banks have poor asset quality leading to

significant

Proportion of NPA. This also may lead to Mergers & Acquisitions, which itself would

be loss of capital to entire system

Huge surplus manpower, absence of good work culture, antiquated labour laws,

inflexible and inefficient labour and existence of strong labour union.

Competition from new players.


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3. Competitor Analysis: Bank of India is one of the competitors of Indian Bank. Lets

analyse

Nationalised Banks Bank of India

(Amount in '< crore)

Group All Banks'

Items 2006-07 2007-

2008-

2009-

2010-

Aggregat

Aggregat

2010-

2010-11

No. of offices 2819 2980 3109 3228 3387 45640 76696

No. of employees 41511 40557 40155 39676 39785 475082 1004182

Business per employee (in '< lakh) 498.00 652.00 833.00 1011.00 1284.00 1144.77 987.38

Profit per employee (in (' lakh) 2.71 4.95 7.49 4.39 6.20 6.95 7.00

Capital and Reserves & surplus 5895 10589 13495 14230 17291 205857 509813

Deposits 119882 150012 189708 229762 298886 3127122 5616432

Investment 35493 41803 52607 67080 85872 942837 1916053

Advances 85116 113476 142909 168491 213096 2311478 4298704

Interest income 8936 12355 16347 17878 21752 256490 491665

Other income 1563 2117 3052 2617 2642 28625 79564

Interest expended 5496 8126 10848 12122 13941 164135 298891

Operating expenses 2608 2645 3094 3668 5068 53819 123129

Cost of Fund (CoF) 4.55 5.37 5.69 4.97 4.53 4.93 4.73

Return on advances adjusted to CoF 3.96 3.97 4.09 3.45 3.59 4.27 4.45

Wages as % to total expenses 19.92 15.38 13.90 14.54 18.28 16.41 17.05

Return on Assets 0.88 1.25 1.49 0.70 0.79 1.03 1.10

CRAR 11.75 12.04 13.01 12.94 12.17 13.47 14.17

Net NPA ratio 0.95 0.52 0.44 1.31 0.91 0.92 0.97

Source: RBI

Competition:(as on july 20) (source: www.moneycontrol.com)

Name Last Price Market Cap.

(Rs. cr.)

Net Interest

Income

Net Profit

(Rs. Cr.)

Total Assets

(Rs. Cr.)SBI 2,132.00 143,066.76 106,521.45 11,707.29 1,335,519.24

Bank of Baroda 696.35 28,716.59 29,673.72 5,006.96 447,321.46

PNB 819.40 27,792.30 36,428.03 4,884.20 458,194.01

Bank of India 324.55 18,646.05 28,480.67 2,677.52 384,535.47

Canara Bank 402.40 17,826.32 30,850.62 3,282.72 374,160.20

IDBI Bank 92.65 11,844.45 23,369.93 2,031.61 253,376.80

Union Bank 191.90 10,565.04 21,144.28 1,787.13 235,984.44

Indian Bank 184.75 7,940.00 12,231.32 1,746.97 141,419.20
http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankindia/SBIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankindia/SBIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofbaroda/BOBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofbaroda/BOBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/punjabnationalbank/PNB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/punjabnationalbank/PNB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofindia/BOIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofindia/BOIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/canarabank/CB06http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/canarabank/CB06http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/idbibank/IDB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/idbibank/IDB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/unionbankindia/UBI01http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/unionbankindia/UBI01http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/indianbank/IB04http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/indianbank/IB04http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/indianbank/IB04http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/unionbankindia/UBI01http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/idbibank/IDB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/canarabank/CB06http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofindia/BOIhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/punjabnationalbank/PNB05http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/bankofbaroda/BOBhttp://www.moneycontrol.com/india/stockpricequote/bankspublicsector/statebankindia/SBI


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Indian Bank

It is an Indian state-owned financial services company headquartered in Chennai, India. It has

18,782 dedicated staff members, 1956 branches and is one of the big public sector banks of

India. It has overseas branches in Colombo, Jaffna, Singapore, and 240 correspondent banks

in 70 countries. Since 1969 the Government of India has owned the bank, which celebrated

its centenary in 2007. It is the only Indian Bank other than State Bank of India to feature in

the List of Fortune 500 Companies in the World.

Indian Bank offers a wide variety of Banking Products and Services to its customers,

including various Deposit Schemes, Loan Options, Financial Services, Stock Investment

Services and a number of specialized services such as Remittance, Collection, 7 Day Banking

Branches, Cash Management and Electronic Funds Transfer.

History

Indian Bank is one of the indigenous banks of India that emerged as a result of the Swadeshi

Movement during the British Raj. The bank was established on 15th of August, 1907. One of

the prime figures associated with the establishment of the bank was V. Krishnaswamy Iyer, a

lawyer from Madras (Now Chennai). The bank soon spread its wings outside India too, and

opened its branch in Colombo, Sri Lanka in the year 1932 and Rangoon, Burma in 1940. The

bank was further nationalized by the Government of India in the year 1969.

Other factual data relating to Indian Bank

Year of Establishment 1907

Headquarters Wing '2-C', No.254-260 ,

Avvai Shanmugam Salai, Royapettah

Chennai - 600 014.

Chairman & Managing Director Mr. T.M. Bhasin

No of Staff 18782

Subsidiaries Indbank Merchant Banking Services Ltd

IndBank Housing Ltd.

IndFund Management Ltd

Total business revenue Rs 211988 crores

Net Profit Rs 1746 crores
http://www.indbankonline.com/http://www.indbankonline.com/http://www.indbankonline.com/http://www.indianbank.in/profile.php#.phphttp://www.indianbank.in/profile.php#.phphttp://www.indianbank.in/profile.php#.phphttp://www.indianbank.in/indfund.phphttp://www.indianbank.in/indfund.phphttp://www.indianbank.in/indfund.phphttp://www.indianbank.in/indfund.phphttp://www.indianbank.in/profile.php#.phphttp://www.indbankonline.com/


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Shareholding Pattern: (moneycontrol.com)

Shareholding belonging to the category : "Promoter and Promoter Group"

No.Name of the

Shareholder

Total Shares held Shares pledged or otherwiseencumbered

Number

As a % of

grand

total

(A) + (B)

+ (C)

Number

% of

Total

shares

held

As a % of

grand total

(A) + (B) +

(C)

1 President of India 343,820,000 80 - - -

Total 343,820,000 80 - - -

Shareholding belonging to the category : "Public and holding more than 1% of the Total

No.of Shares"

No. Name of the ShareholderTotal Shares

held

Shares as % of Total No.

of Shares

1 Life Insurance Coporation of India 10,415,499 2.42

2 Stichting Pensidenfonds ABP 4,554,820 1.06

3HDFC Standard Life Insurance

Company Ltd7,275,986 1.69

Total 22,246,305 5.


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Management Team:

Name Designation

T M Bhasin Chairman and Managing director

B Raj Kumar Executive Director

N Krishna Mohan Nominee Director

Amarjit Gupta Non Official Part Time Director

M Butchi Rami Reddy Non Official Part Time Director

Chintaman Mahadeo Dixit Shareholder Director

Rajeev Rishi Executive Director

Shaktikanta Das Nominee Director

M Jayanath Employee Director

Sanjay Maken Non Official Part Time Director

Narendra Kumar Agrawal Shareholder Director

Profile of Key People:

Mr. T.M. Bhasin:

Shri T.M. Bhasin has assumed charge as Chairman & Managing

Director of Indian Bank on 1st April 2010. Prior to assuming charge

as Chairman & Managing Director, he was Executive Director of

United Bank of India since 7th November 2007.

EDUCATIONAL & PROFESSIONAL QUALIFICATIONS

of Shri T M Bhasin are as under:-


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MBA (Finance) from Faculty of Management Studies, (FMS), University of Delhi.

(1984-87)

Advanced Financial Management Programme at JFK School of Government, Harvard

,US (2004).

LL.B. from Campus Law Centre, University of Delhi (1980-83) Certified Associate of Indian Institute of Bankers (CAIIB) (1988)

M.Sc.(Gold Medalist) (1975-77)

One Year Course in Criminology and Forensic Science (Delhi University Topper)

(1983-84)

Diploma in Office Organisation & Procedures from Punjab University, Chandigarh.

(1982)

SPECIAL ACHIEVEMENTS

Authored a Book on E-Commerce in Indian Banking 616 pages published byAuthors Press, New Delhi (2002).

Authored well researched articles on contemporary issues in renowned national

dailies and Banking Journals / Magazines.

As Honorary Secretary, IBA Delhi Chapter during August 2000 to November

2007 period coordinated and organized all major Banking Seminars, Bankers

meets and other events under the aegis of IBA at Delhi.

Mr Rajeev Rishi:

Shri. Rajeev Rishi has assumed charge as Executive Director of Indian Bank on 1st October

2010.

Before joining Indian Bank, he was the General Manager of

Oriental Bank of Commerce with rich experience in banking

having worked in various parts of the country such as Chandigarh,

Bhubaneswar, Kolkata, Dehradun, Pune, Mumbai, Ludhiana etc.

He belongs to Chandigarh (UT) and holds degree in BA, LLB.

Mr. B Rajkumar:Shri B Raj Kumar, Executive Director of Indian Bank assumed

charge on 1st January, 2012.

Aged 56 years, Shri B Raj Kumar started his career with Andhra Bank in December, 1978

and has more than 33 years of experience of serving the bank. He is a Post Graduate in

Engineering with MBA.and CAIIB .He has a wide field exposure having worked in various

branches of Andhra Bank, viz., Bhilai, Chowringhee-Kolkata, Kurnool, Coimbatore,

Bangalore, Trivandrum, Mumbai etc. He was also General Manager of Hyderabad and New

Delhi zones of the Bank. He was heading the Integrated Treasury of Andhra Bank as GeneralManager and before joining Indian Bank, has gained expertise in the field of Investments and


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International Banking. He has attended a number of training

programmes that includes a programme on Derivates in Integrated

Treasury Management at Asian Institute of Management,

MANILA.

Financial performance of the company: (www.moneycontrol.com)

Yearly Results of Indian Bank (All fig in Rs.Crores)

Mar '12 Mar '11 Mar '10

Sales Turnover 12,231.32 9,361.03 7,714.37

Other Income 1,179.83 1,181.89 1,316.41

Total Income 13,411.15 10,542.92 9,030.78

Total Expenses 3,382.27 2,583.54 2,125.99

Operating Profit 8,849.05 6,777.49 5,588.38

Profit On Sale Of Assets -- -- --Profit On Sale Of Investments -- -- --

Gain/Loss On Foreign Exchange -- -- --

VRS Adjustment -- -- --

Other Extraordinary Income/Expenses -- -- --

Total Extraordinary Income/Expenses 52.33 -- --

Tax On Extraordinary Items -- -- --

Net Extra Ordinary Income/Expenses -- -- --

Gross Profit 10,028.88 7,959.38 6,904.79

Interest 7,813.32 5,324.92 4,553.18

PBDT 2,267.90 2,634.46 2,351.61

Depreciation -- -- --

Depreciation On Revaluation Of Assets -- -- --

PBT 2,267.90 2,634.46 2,351.61

Tax 520.93 920.39 796.62

Net Profit 1,746.97 1,714.07 1,554.99

Dividend Tax -- -- --

Dividend (%) -- -- --

Earnings Per Share 40.65 39.88 36.18

Book Value -- -- --

Equity 429.77 429.77 429.77

Reserves 8,807.63 7,496.77 6,217.25

Face Value 10.00 10.00 10.00


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Performance (march 2012):

Product Name Unit value (Rs.Cr) Qty (Nos.) %Sales Turnover

Income on investments Rs. 2,790.32 0 22.81

Interest on Balances with RBI Rs. 17.13 0 0.14

Interest/Discount on Adv/Bills Rs. 9,423.87 0 77.05

Others Rs. 0.00 0 0.00

Source:http://www.indiainfoline.com/Markets/Company/Background/Finished-Goods/Indian-

Bank/532814

Nationalised Banks Indian Bank

(Amount in '< crore)Group All Banks'

Items 2006-07 2007-

2008-09 2009-10 2010-

Aggregat

Aggregate

2010-11 2010-11

No. of offices 1478 1577 1680 1792 1894 45640 76696

No. of employees 20892 20548 19993 19641 19311 475082 1004182

Business per employee (in '< lakh) 364.00 488.00 617.00 761.00 930.00 1144.77 987.38

Profit per employee (in (' lakh) 3.64 4.91 6.23 7.92 8.88 6.95 7.00

Capital and Reserves & surplus 3841 5160 7136 8272 9521 205857 509813
http://www.indiainfoline.com/Markets/Company/Background/Finished-Goods/Indian-Bank/532814http://www.indiainfoline.com/Markets/Company/Background/Finished-Goods/Indian-Bank/532814http://www.indiainfoline.com/Markets/Company/Background/Finished-Goods/Indian-Bank/532814http://www.indiainfoline.com/Markets/Company/Background/Finished-Goods/Indian-Bank/532814http://www.indiainfoline.com/Markets/Company/Background/Finished-Goods/Indian-Bank/532814http://www.indiainfoline.com/Markets/Company/Background/Finished-Goods/Indian-Bank/532814


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Deposits 47091 61046 72582 88228 105804 3127122 5616432Investment 20878 21915 22801 28268 34784 942837 1916053Advances 29058 39839 51397 62146 75250 2311478 4298704

Interest income 4195 5213 6830 7714 9361 256490 491665

Other income 823 1006 1035 1316 1182 28625 79564

Interest expended 2413 3159 4222 4553 5325 164135 298891Operating expenses 1247 1400 1588 1730 1926 53819 123129

Cost of Fund (CoF) 4.97 5.46 6.13 5.56 5.39 4.93 4.73

Return on advances adjusted to CoF 4.93 4.71 5.02 4.66 4.94 4.27 4.45Wages as % to total expenses 24.01 21.22 19.84 19.30 18.38 16.41 17.05

Return on Assets 1.46 1.64 1.62 1.67 1.53 1.03 1.10

CRAR 14.14 12.74 $ 13.98 12.71 13.56 13.47 14.17Net NPA ratio 0.35 0.24 0.18 0.23 0.53 0.92 0.97

Source: Reserve Bank of India

SWOT Analysis of Indian Bank:

Strenghts:

1. Rural banking expertise2. Strong international network of banks with 240 overseas correspondent banks in 70

countries

3. High end banking technology with core banking at all 1956 branches

4. It has 22,000 employees

5. Diversified banking activities under 3 subsidiaries i.e. Indbank Merchant Banking

Services Ltd, IndBank Housing Ltd, IndFund Management Ltd

Weakness:

1. Less presence in India as it has competition in urban areas as well as rural areas

2. Limited advertising in comparison with leading banks

3. Low number of ATMs and branches as compared to other big bankbrands

Opportunity:

1. Urban market banking and retail banking

2. Favourable Government rural schemes

3. More expansion in untapped rural markets

Threat:

1. Economic crisis and fluctuating market scenarios2. Highly competitive environment


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3. Stringent Banking Norms by Govts and RBI.

Various strategies Employed by the Indian Bank:

(http://www.sebi.gov.in/dp/indianbank.pdf)

1. Developing Technological capabilities:The development of efficient means of reaching customers and processing

transactions is a key element of the managements goal to expand their profitability

and to capitalize on opportunities for organic growth. They have revised their IT

strategy and taken initiatives including the implementation of the Core Banking

Solutions through their wide area network, increasing the number of ATMs and

introducing alternate delivery channels (e.g., internet banking, mobile banking and

telebanking). They seek to improve their services by using technology for better credit

management, extending their rural reach and increasing data storage capabilities.

They are also evaluating opportunities to implement certain technological

advancements such as e-enabled smart card technology and participating in e-

governance. They believe that technology offers unparalleled opportunities

to reach out to their customers in a cost-efficient manner.

2. Maintaining and enhancing their franchise in the agriculture and SME sectors:

The management intends to maintain and enhance the banks position as one of the

leading banks for agricultural lending in India. They have introduced innovative

products such as Kisan credit cards, which provide farmers with convenient and

assured financing for their production, investment and consumption activities. They

have a dominant presence in the agriculture sector, particularly in southern India.

They also intend to further expand their agricultural sector lending activities to otherareas. Another aspect of their strategy is to further strengthen their ties with the
http://www.sebi.gov.in/dp/indianbank.pdfhttp://www.sebi.gov.in/dp/indianbank.pdfhttp://www.sebi.gov.in/dp/indianbank.pdfhttp://www.sebi.gov.in/dp/indianbank.pdf


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agricultural community by providing training and social support programs for the

rural populace. They intend to focus on giving loans to SMEs to facilitate their

establishment, expansion and modernization of businesses. They have identified and

created a separate business segment for SMEs and introduced centralised processing

of credit applications to quicken the credit decisions and improve lending to thisparticular segment.

3. Enhancing their retail banking business and focus on small businesses:

They intend to continue their focus on growing their retail banking business. The

retail sector has emerged as a rapidly growing opportunity for banks that have the

skills and infrastructure to adequately service this market. The keys to their retail

strategy are developing new products and services, networking their branches,

improving customer service and developing their distribution channels, including their

ATMs and internet banking facilities. In addition, they believe that there is potential

to generate additional revenue by focusing on higher value-adding products and by

increasing cross-selling across their different distribution channels. They expect that

by increasing the sale of high margin products, such as mutual fund products,

insurance products, and credit and debit cards, they will also increase their fee-based

revenue. They place emphasis on financing and nurturing small entrepreneurial

activities. Their focus is to provide loans to entrepreneurs for certain activities, such

as the purchasing of commercial space and new or second hand shops.

4. Build upon and expand their rural area business:

They have traditionally had a strong presence in the rural and semi urban areas. Theybelieve there is substantial potential for expanding their business by increasing their

focus and leveraging their strength in these areas, including rolling out new products

and services and increasing the accessibility of their products. They have focused on

playing an active role in providing microfinance through SHGs. They believe that

financial inclusion would pave the way for marketing of their products and services

to people who do not have access to banking services.

5. Strengthen and expand their corporate and commercial product and service offerings:

They seek to strengthen their position in the corporate and commercial sector by

expanding their product and service offerings to growth-oriented small, medium and

large sized businesses. They seek to increase their customer base by offering

innovative products and servicing the needs of these customers through specialized

branches. Additionally, they seek to cross-sell their fee-based products and services to

their current customer base and thereby increase our income from these products and

services.

6. Maintaining high asset quality standards through comprehensive risk management:

They have improved their loan and investment portfolios by carefully targeting their

customer base and implementing a risk assessment process and other risk monitoring

and remedial procedures. They actively monitor their loans and reassess their credit


16/17

ratings once a year or more frequently if they are at risk. They also apply aggressive

remedial policies to recover non-performing loans. In addition, they maintain

internal policy guidelines concerning exposure to individual industries and

concentration of loans.

7. Leveraging on strong brand equity and expansive branch network:

They are currently celebrating their centenary and they believe that they enjoy a

strong brand perception. We strive to further build our Indian Bank brand through a

focused marketing approach and using our widespread network of branches and other

delivery channels. They plan to use the brand equity enjoyed by the Bank to enhance

our business. They have adopted a new symbol to commemorate their centenary

celebrations.

8. Attract and retain skilled and experienced professionals:

They believe the recruitment, training and retention of skilled and experienced

professionals are essential to the success of their business. They intend to continue

attracting the appropriate level of talent from across India through the right mix of

recruitment and retention strategies.

9. Control their costs:

They have made a concerted effort to achieve a low overall cost of funds. They strive

to do this by seeking operating efficiencies, developing deposit products with lower

costs and regularly reviewing their costs for areas where we can achieve cost controls

while continuing to develop their business.

10.Pursuing selective strategic alliances:

They aim to deliver a comprehensive range of financial products under one brand

with a view to become a financial supermarket. They have signed a Memorandum of

Understanding (MoU) with Oriental Bank ofCommerce and Corporation Bank to

create a strategic alliance with a view to collectively face the challenges of

consolidation, convergence and competition without sacrificing the legal identity of

the Bank to harness the economies of scale. Additionally, they have entered into

alliances with mutual funds, life insurers and non-life insurers to distribute their

products. They have also signed an MoU with the ministry of Railways to install and

operate ATMs at select Railway Stations. They will continue to seek to enter into

strategic alliances with other banks and financial institutions where management

believes such alliances will provide advantages to their core business.


17/17

References:

1. http://www.indianbank.in/

2. http://www.sebi.gov.in/dp/indianbank.pdf

3. http://www.indiainfoline.com/Markets/Company/Background/Finished-

Goods/Indian-Bank/5328144. http://blogs.reuters.com/great-debate/2012/03/13/three-disturbing-trends-in-

commercial-banking/

5. www.moneycontrol.com

6. http://finance.yahoo.com/news/research-markets-global-banking-industry-

210800014.html

7. http://global.banking.2020.s3-website-us-east-

1.amazonaws.com/chap04.html#landscape

8. www.wikipedia.com

9. http://www.businesswire.com/news/home/20120717006797/en/Research-

Markets-Global-Banking-Industry-2012-2017-Total

10.http://myiris.com/newsCentre/storyShow.php?fileR=20120511151817038&dir=201

2/05/11&secID=resultanal
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