Indian Bank Reports ₹700 Crore Profit from Priority Sector Lending Certificates

Indian Bank has reported a significant profit of over ₹700 crore from the sale of Priority Sector Lending Certificates (PSLCs) so far in the current fiscal year, reflecting its increasing focus on lending to agriculture, small businesses, and the MSME sectors.

In its second-quarter financial results, the Chennai-based lender reported a 36% year-on-year increase in net profit, amounting to ₹2,706 crore. This growth was supported by higher interest income and lower provisioning expenses. During a media briefing, SL Jain, the Managing Director and CEO of Indian Bank, highlighted that profits from the sale of PSLCs rose from ₹479 crore in FY23 to ₹657 crore in FY24. He also noted that the bank has achieved ₹727 crore in profit from PSLCs to date in FY25, indicating a strong performance in this profitable segment.

According to Reserve Bank of India (RBI) guidelines, all scheduled commercial banks are required to allocate 40% of their adjusted net bank credit to priority sector lending (PSL), which encompasses loans for agriculture, MSMEs, housing, and microcredit. Banks that exceed their PSL targets can sell PSLCs to those that fall short.

As of September 2024, Indian Bank’s PSL advances amounted to ₹1.88 lakh crore, representing 44% of the adjusted net bank credit. The agriculture sector made up the largest portion of these advances, with ₹87,896 crore allocated to agricultural lending, followed by ₹81,246 crore to non-corporate farmers and ₹52,434 crore to marginally weaker sections.

The bank’s strategic emphasis on retail, agriculture, and MSME (RAM) segments over corporate loans has contributed to the growth in PSL advances. By the end of the September quarter, the RAM segment constituted 63% of Indian Bank’s total domestic advances of ₹5.13 lakh crore, with total RAM advances increasing by 14% year-on-year to ₹3.25 lakh crore. In contrast, corporate loans grew by 9% to ₹1.88 lakh crore.

Looking ahead, Jain stated that the bank anticipates overall credit growth to fall within the range of 11-13% and expects deposit growth to be between 8% and 10% for the current fiscal year. He reaffirmed the target for recoveries at ₹7,000-7,500 crore.

This performance underscores Indian Bank’s commitment to supporting priority sectors, particularly MSMEs, as it seeks to enhance its profitability while contributing to the broader economic growth in India.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Readers are encouraged to conduct their own research or consult a financial advisor before making any investment decisions.