Indian Bank Eyes Wealth Management Amid Rate Shifts

Binod Kumar, MD & CEO of Indian Bank, predicts that interest rates have reached their lowest point and anticipates a rise in retail deposit rates, impacting net interest margins (NIMs). He believes the current 3% NIM is unsustainable as India progresses towards developed economy status, projecting a drop below 2.5%. To counter this, Indian Bank plans to establish a wealth management vertical in the latter half of 2026, leveraging its growing high-net-worth individual customer base.

The bank is also preparing to raise approximately ₹5,000 crore, with an option for an additional ₹2,500 crore, to comply with Expected Credit Loss (ECL) norms, a move expected to reduce the government's stake from 73.84% to about 70.9%. Kumar stated that this capital is not for growth but solely for ECL implementation.

Looking ahead, Indian Bank targets an 11-13% credit growth for FY27, aiming to increase the retail loan share to 25% from the current 23% and MSME loans to at least 20% from 18%. The bank also focuses on sustaining low-cost deposits through salary accounts and cash management services.

Kumar also commented on the banking sector's consolidation, suggesting it is necessary for Indian banks to achieve global scale and compete internationally. He believes consolidation can help more Indian banks enter the global top 100 rankings.