Indian Bank

Sort Analysis Strength:High end banking technology with core banking at all 1500 branches including two foreign branches Singapore and Colombo. It has 26000 employees including 9000 officers. Diversified banking activities under 3 subsidiaries i.e. Indbank Merchant Banking Services Ltd, IndBank Housing Ltd, IndFund Management Ltd. Strong international network of banks with 240 overseas correspondent banks in 70 countries. Bank have 66 credit intensive branches in the larger cities and metros .Ten of these were designated corporate branches to handle credit of Rs 25crores (250mn) and above. Bank also have credit monitoring department (CMRD) to independently monitor the department that looks into loan sanctioning or approvals. A 93 year old bank with a good and loyal clientele which has been operating successfully right up to the late 80 s. Under restructuring plan, Bank achieved all targets and bring down Nonperforming assets (NPA) from 43% to 15% in less than two years and cost of deposit from 8.7% to 5.9%. According to the report, bank had received recapitalisation of a sum of Rs 2400Crores (24bn) already around Rs 600crores (6bn) in the late 80 s and early 90s, Rs 1700crores (17bn) in 1998 and 100crores (1bn) in 1999. In case of Rural banking they also started taking sgriculture colleges as summer trainees to further improve agriculture credit. Bank have got 200 very bright young officers who have undergone training and are doing exceedingly well. Weakness: Less presence in india as it has competition in urban and rural areas

Low number of ATM s and branches as compared to other big bank brands. Low advertising and brand visibility. They started advertised in the newspaper after a period of seven years. Bank had negative capital adequacy of nearly 13% and considered one of the weakest bank. Employee management was not good. Morale of the workforce was low. Bank Had weak governance, non compliance with statutory requirements, negative net worth. Due to indiscriminate lending from the period 1996 to 1999 bank had frozen credit. Opportunities:Bank has the opportunities in the retail banking as well as urban market banking. Favourable government rural schemes. More expansion in untapped rural markets and to tapped rural market they are planning to have separate rural branches. During the restructuring of the bank they hired young, smart and energetic MBA student in order to improve the marketing area and to bring lots of new business. Threat:Economic crisis and fluctuating market scenarios. Highly competitive environment. Stringent Banking Norms by Govt s and RBI. The External environment is both competitive and constantly changing but the bank had so much negative publicity all over the country even in the Chennai where the bank has headquarters. In 2001, bank also had a threat that the Singapore monetary authority was talking of closing the branch there due to this bank is not only affected but the country s image also and full- fledged licence which is not available to other bank in Singapore nor is the license is transferable or saleable. Threat from the competitors like SBI, BANK OF BROADA, ICICI BANK, ANDHRA BANK.

Performance of Indian Bank There are many turnarounds in the performance of the Indian bank from the period of 1997 to 2000.The Bank submitted a Restructuring Plan 2000-03 in June 2000 to the Government of India (the Plan) seeking, inter alia, recapitalisation for improving the financial strength of the Bank, to reach the required Capital adequacy ratio of 9% and to meet the gap created by application of the prudential income recognitions norms. After the implementation of restructuring plan in October 2003 the operating profit grew by 22.76% to 4.84bn which was 3.94bn in December 2002. Net profit grew by 116.18% to 3.02bn as against the 1.40bn for the corresponding period of last year. Net interest income roses by by 39.09% from 2.22bn to 7.91bn as compared to 5.69bn for the corresponding period of last year. Capital adequacy ratio (CRAR) of the bank improved to 12.85% as compared to 10.85%. Return on assets improved to 0.84% as compared to 0.65% for the year ended march 2003. The business per employee improved to Rs 191 lakhs as compared to Rs 179 lakhs in March 2002-03. NPA was also improved from 43% to 15% in less than two years. The deposits, investment, credit also improved in period of 2000 to 2003. The global postion of Indian bank is also improved. The Bank received an award from NABARD for best performance under SHG in Tamil Nadu and Andhra Pradesh in the period of 2002 to 2003. The Indian bank still continues progress in the banking industry.

Importance turnaround

of

Leadership

in

case

of

such

I think leadership is the most important in such a turnaround because management change can begin only when company leaders have decided that changes are necessary. In our case study same thing done by ranjana Kumar. Under her stewardship, the bank has turned around successfully achieving all the targets set under the restructuring plan including bringing down the gross non performing assets (NPA).