Indian Overseas Bank (IOB) has become the first public sector bank to implement the Finacle 10, the latest digital banking package from Infosys Finacle. By end of January 2016, the bank successfully implemented the migration of more than 3,500 branches networked by legacy software to Finacle 10. The implementation project was executed by American technology company HPE.
According to R Koteeswaran, Managing Director and Chief Executive Officer of IOB, the long-term contract with HPE is part of a comprehensive plan to reduce the bank’s NPA, which stands at roughly Rs 15,000 crore. He further said that the bank’s investment in Finacle 10 will enable it to handle transactions made through e-wallet and Near Field Communication (NFC) payments through smartphones.
IOB has adopted the strategy of reducing large-ticket lending and is currently focusing on lending out in lakhs instead of crores. According to Koteeswaran, increased lending in the range under Rs 1 crore, a steep decline of 14% in the Rs 1–50 crore loans and a 10% fall in its Rs 100-500 crore loan range show the direction taken by the bank. Koteeswaran further said that more than 60% of the bank’s NPAs are loans to consortiums, over which the bank can have little sway over their turnovers. Currently, the bank has made a conscious move to lend small-ticket loans and clean up its balance sheet. The retail loans of the bank have grown by 23% since the beginning of the new year.