Dubai: Indian Overseas Bank (IOB) is a leading public sector bank based in Chennai, India. Currently the bank has 2,019 branches across India. M. Narendra took charge as Chairman and Managing Director of Indian Overseas Bank on November 1 last year.
IOB is planning to increase its branches to 3,000 and achieve an equal number in automated teller machines (ATMs) across India by next financial year.
The bank has on its expansion radar African and other Asian countries. IOB also intends to open branches in Gulf countries.
IOB is planning to raise $1 billion (Dh3.67 billion) by way of medium-term notes (MTN) in various tranches. The bank is looking to increase its Tier-I capital, and has approached the government for Rs140 million (Dh11.66 million) of additional capital.
In a recent interview with Gulf News, Narendra said Indian banks have emerged stronger from the global financial crisis thanks to strict compliance to Basel II capital requirements and prudential norms.
Gulf News: With the Indian economy expected to grow at over 9 per cent in fiscal 2011-12, what kind of growth do you visualise for the banking sector?
M. Narendra: There is a general consensus that Indian economy will grow at close to 9 per cent in next financial year. The growth may be higher if the mounting inflationary pressures could be mitigated. Most sectors including agriculture, exports, manufacturing, corporate sales are expected to post good growth in the coming year.
All these would mean more demand for bank credit which is already growing significantly.
What are the factors that ensure the robustness of the banking sector?
The world has witnessed the robustness of the Indian banking sector in the global crisis of the recent past. Indian banks were the least hurt in the global pile up. India is among very few countries which have complied with Basel II. They have a wide network of branches and diversified operations. Most banks are gearing to expand their overseas operations substantially. There is still huge potential for scalability in the Indian banks.
Do you see a further hardening of interest rates in 2011-12?
There is a possibility of further hardening of interest rates in the near term as food inflation continues to impact the economy. The possibility of global food inflation spilling into the country also cannot be ruled out. Any easing of rates can only be expected in the second half of the coming financial year.
India continues to be the biggest recipient of inward remittances from its overseas workers. Do you see this continuing for the next few years?
Inward remittances will continue to be steady and growing as global uncertainties increase and more and more Indians migrate to study, work or do business. Indian economy is now construed as an attractive and safe place to save and invest.
Is IOB aiming for a larger share of the remittances business from the UAE and the Gulf region?
Yes, we plan to enlarge our collection points wherever there is potential. We also plan to launch complementary products specifically suited to NRI needs.
What are your plans for the Gulf region, in terms of opening new rep offices, enhancing the exchange network, etc?
Our Dubai representative office, which was opened in February 2010, has been actively focusing on non-resident Indian business and remittance services. We already have certain Dubai-based clientele dealing with our Singapore and Hong Kong branches. With the help of the goodwill generated by the representative office and support of the Dubai-based clients, in course of time we intend to upgrade it into a full-fledged branch after going through the necessary approvals.