Under the new leadership, the youngest public sector lender IDBI Bank is seeking to resolve profit-dragging issues like low retail penetration and inability to meet priority sector lending target with an ambitious plan to almost double branches to 2,000 by FY 2015.

The bank has also set stiff targets on the share of low-cost current and saving account (CASA) deposits and upping the net interest margin, which at present is among the lowest in the industry, to 3 per cent by FY 2015, its newly-appointed chief M S Raghavan has said. Net interest margin is the difference between the interest earned and interest paid out (deposits).

“Factors affecting our bottom lines are very clear and we will overcome them over the next two years,” Raghavan, who took over as chairman and managing director early July, told PTI in an interview here.

He said it being a development finance institution IDBI Bank has not been able to expand its retail presence, even though it changed into a commercial lender way back in 2004.

“I do not have a retail presence, yet I am forced to operate like all other retail lenders. The only way forward is to strengthen the retail franchise,” he said.

The bank is targeting to increase the composition of Casa deposits to 26-27 per cent by the end of the current fiscal and 30 per cent by the end of March 2015, Raghavan said.

This will also improve the net interest margin, which came in at 2.15 per cent in June quarter, to 2.6-2.7 per cent by end of March 2014 and to over 3 per cent by March 2015.

When asked about the means to achieve the ambitious targets, Raghavan said, “For a bank of our size, we only have around 1,120 branches. We will increase them by 300 this fiscal and to 2,000 by March 2015.”

It will also increase the automated teller machines to up to 5,000 from the present 1,780 during the same period, he said.

Raghavan’s predecessor R M Malla also sought to address the retail presence issue and one of the most ambitious steps he took was to make a slew of services like locker charges, demand draft generation, unlimited access to other ATMs etc free for customers.

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