Indian Bank plans to recover up to ₹5,500 crore from bad loans this fiscal year, after achieving ₹1,885 crore in the first quarter. The bank is also pushing to reach USD 2 billion in foreign currency deposits by September following recent interest rate policy changes by the RBI.
Public sector lender Indian Bank has announced an aggressive strategy to improve its asset quality by recovering between ₹4,500 crore and ₹5,500 crore from bad loans throughout the current financial year, FY27. This recovery plan follows a solid start in the first quarter, where the bank successfully realized ₹1,885 crore. A notable portion of this recovery, approximately ₹500 crore, is expected to come from ongoing resolutions at the National Company Law Tribunal.
Foreign Currency Deposit Strategy
Beyond loan recovery, the bank is focusing on mobilizing foreign currency deposits. As of July 9, 2026, the bank had collected USD 140 million and is aiming for a total of USD 2 billion by the end of September. This growth plan is supported by the Reserve Bank of India's recent decision to remove interest rate ceilings on fresh Foreign Currency Non-Resident (Bank) deposits with maturities between three and five years.
This regulatory shift is designed to encourage inflows from Non-Resident Indians and other eligible overseas investors. The bank's management remains optimistic about this goal, citing a current pipeline of USD 1 billion, which is significant given that overall sector inflows into such deposits had seen a decline in the previous fiscal year.
CASA Growth and Deposit Quality
Domestic deposit quality has also shown improvement, with the bank reporting a 15.3% growth in low-cost Current Account and Savings Account (CASA) deposits for the first quarter of FY27. These low-cost deposits reached ₹3,19,525 crore, helping the bank achieve a CASA ratio of 39.73%. This is a key metric for investors, as a higher CASA ratio generally allows banks to maintain better net interest margins by lowering their overall cost of funds.
Recent initiatives have also contributed to this performance, including a strategy to reactivate 17 lakh inoperative accounts, which brought in ₹1,469 crore in additional savings balances. Management also reported an increase in average balances for both savings and current accounts, reflecting a focus on deepening existing customer relationships.
Investors may monitor the bank's progress toward its 40% CASA ratio target throughout the remainder of the year. Additionally, the ability of the bank to maintain its recovery momentum on bad loans and successfully hit its foreign currency deposit targets by the September deadline will be important indicators of operational execution in a changing interest rate environment.