IndusInd Bank, Bharat Financial boards likely to meet next week to finalise merger, says Romesh Sobti

The boards of IndusInd Bank and Bharat Financial Inclusion could meet next week, hopefully, to complete the formalities of the proposed merger, said Romesh Sobti, managing director and CEO of IndusInd Bank, adding that the June-quarter results will include consolidated financial statements of the two banks.

“The liability profile is an important part of the synergy. They have 9-9.5 million customers, 115,000 villages, 1,800 branches and each one of these customers will have a savings bank account. So, over the next 2-3 years this will become an additional low cost source of raising liabilities,” added Sobti.

He further said that IndusInd's microfinance institution (MFI) book will be at 9-10 percent after the Bharat Financial merger.

Talking about stressed assets, he said, “Our special mention accounts 1 and 2 (SMA) exposure sectorally was less than Rs 600 crore over 45 odd companies. So we have nil overdue.”

Loan growth in FY20

On the business front, he said, “Our commercial vehicle (CV) book is growing healthily even if the market slowed down and also the NBFC portfolio is behaving well, we are not seeing any undue stress there.”

“We have got diversified loan book, so for us doing mid-20 growth in loan book is not a stretch but in the system the NBFCs has played a huge role in the flow of credit and one of the ways they have adapted to cope with liquidity is to slow down the pace of lending because disbursements slowed down, repayments are still coming in, there are no defaults in their books. I think that is going to affect overall credit growth and to that extent these people need some liquidity support,” Sobti added.

According to him, provision coverage ratio should go back to 60 percent by FY20.

Succession plan

Sobti has built this bank from strength to strength and in 9 months he will call it a day. Sobti said that the board has been engaged with me on an orderly succession.

“The board and I are committed to giving a smooth succession. So all that is in place; grooming and all has been done for many years now and we are confident that the switchover will happen,” he added.

He believes that the RBI will retain its succession and retirement deadline