Taking advantage of its growing emphasis on advances to the MSME, small company, and agricultural sectors, the Indian Bank has earned a profit of over Rs 700 crore from the sale of priority sector lending certificates thus far this fiscal year.
Higher interest revenue and lower provisioning costs helped the Chennai-based lender announce a 36% year-over-year increase in its second-quarter net profit to Rs 2,706 crore on Monday. According to SL Jain, MD and CEO, who spoke to the media on Tuesday, the earnings from the sale of PSLCs increased from Rs 479 crore in FY23 to Rs 657 crore in FY24. “We have made a profit of Rs 727 crore in FY25. Jain told FE, “We are expanding this (PSLC) industry, which is profitable and provides decent returns.
All scheduled commercial banks are required by RBI rules to devote 40% of their adjusted net bank credit to priority sector lending (PSL), which includes microcredit, MSMEs, housing, and loans to agricultural and related industries. Banks that surpass their PSL goals provide PSLCs to lenders who don’t meet their goals.
PSL advances from Indian Bank was Rs 1.88 lakh crore as of September 2024, or 44% of adjusted net bank credit. With Rs 87,896 crore, agriculture advances made up the largest portion of this. Loans to non-corporate farmers (Rs 81,246 crore) and marginally poorer sectors (Rs 52,434 crore) came next.
Indian Bank’s continued focus on retail, farm, and MSME (RAM) loans rather than corporate loans is the reason for the rise in PSL. 63% of the bank’s Rs 5.13-lakh-crore domestic advances as of the September quarter came from the RAM category, with corporate loans making up the remaining amount. Corporate loans increased 9% to Rs 1.88 lakh crore, while total RAM advances increased 14% year over year to Rs 3.25 lakh crore.
According to Jain, the bank’s total loan growth will be between 11 and 13 per cent, as previously predicted, while deposits are anticipated to increase by 8% to 10% over the current fiscal year. “We had already given guidance on recovery of Rs 7,000–7,500 crore. We want to stay inside that goal,” the MD stated.
