Indian Bank has reported over Rs 700 crore in profit from sale of priority sector lending certificates ((PSLCs) so far this fiscal, capitalising on its increasing focus on advances to the agriculture, small businesses and MSME sectors.
The Chennai-based lender on Monday reported a 36% year-on-year increase in its second quarter net profit to Rs 2,706 crore, aided by higher interest income and lower provisioning expenses. Addressing the media on Tuesday, SL Jain, MD and CEO, said profit from sale of PSLCs went up from Rs 479 crore in FY23 to Rs 657 crore in FY24. “We have done Rs 727 crore in profit till date in FY25. We are growing this (PSLC) business, which is a profitable one and offers good returns,” Jain told FE.
According to RBI guidelines, all scheduled commercial banks must allocate 40% of their adjusted net bank credit to priority sector lending (PSL), which includes loans to agriculture and allied activities, MSMEs, housing and microcredit. Banks that exceed their PSL targets sell PSLCs to lenders who fall short of their targets.
As of September 2024, Indian Bank’s PSL advances stood at Rs 1.88 lakh crore, or 44% of the adjusted net bank credit. Of this, agriculture advances formed the largest chunk at Rs 87,896 crore, followed by loans to non-corporate farmers (Rs 81,246 crore) and marginally weaker sections (Rs 52,434 crore).
The increase in PSL can be attributed to Indian Bank’s ongoing emphasis on the retail, agriculture and MSME (RAM) segment over corporate loans. As of September quarter, the RAM segment accounted for 63% of the bank’s Rs 5.13-lakh-crore domestic advances, with the remainder coming from corporate loans. Total RAM advances grew 14% YoY to Rs 3.25 lakh crore, while corporate loans saw a 9% increase to Rs 1.88 lakh crore.
Jain said the bank’s overall credit growth will be in the range of 11-13% as guided earlier while deposits are expected to grow between 8% and 10% in the current fiscal.
“On recoveries, we have guided Rs 7,000-7,500 crore earlier. We would like to stick to that target,” the MD said.
Content retrieved from: https://www.financialexpress.com/business/banking-finance-indian-bank-logs-rs-700-crore-profit-from-psl-certificates-sale-3652278/.
