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New Beginning of Indian Bank
A Case Study On
Turnaround Story of Indian Bank
AMAL REMESH & ADITH
VENUGOPAL
MBA-SNGCE
The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank
Definition of
turnaround strategy
In General sense
to transform a loss
In Business Sense
to deal with issue
making company into a

profit making one .
of a loss making
company
In an Academic
senseto solve
the root cause
failure of a loss
making company.
INDIAN BANK : A PHOENIX

The success story of Indian Banks strengthening operations
through restructuring is in consonance with its vision to become
the
best
bank
in
the
country.
Soon after restructuring the loss making bank was ranked as

number one among south based service brands and 13 among
Indias top 50 most trusted service.( AC Nielson ORG-MARG
Survey published in The Economic Times )
INDIAS TURNAROUND
QUEEN
First woman Officer in the Public sector banks to
become Chairman and Managing Director.
Took charge of restructuring Indian bank in June
2000.
Vigilance Commissioner in Central Vigilance
Commission in 2005.
Smt. Ranjana
Kumar
Retirement as Chairperson of National Bank for

Agriculture and Rural Development (NABARD) .
INDIAN BANK
Indian Bank a swadeshi bank on started in 15 August 1907, exactly 40
years before India got its independence.
It has 22,000 employees, 2100 branches and is one of the big public sector
banks of India.
It has overseas branches inColombo,Jaffna, Sri Lanka, Singapore, and
229correspondent banksin 69 countries.
Through its trusted banking service it gained its brand equity, committed
and
emotionally
attached
customers
who
have
been
banking
generations with it.

for
5
WHAT WENT WRONG .?
Indian Bank continued to flourish and boasted of the trust it had been
enjoying since the early 1900.
The 'nine decades of trust', suddenly came under threat in the 1990s,
when it started facing a problem in the management of assets and
liabilities due to indiscriminate growth of credit.
Banks CREDIT-DEPOSIT RATIO grew disproportionately to 64.6 percent as

of March 1992 (as against 52.4 percent for all banks)
The Bank started incurring huge loss from 1993-94

The Bank started incurring losses from 1993-94
500
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
-500
-1000
-1500
Operating profit/loss
Net profit/loss
Net worth
THE NEW BEGINNIG
GOI and RBI decided on a restructuring plan in June 2000 under the leadership of
(its new CMD)
Smt. Ranjana Kumar.
loopholes first exposed by the introduction of the new banking norms.
An MOU was signed with all unions and associations agreed to give the
management a free hand on the three-year long initiative.
Ensured accountability and put pressure on the bank to perform.
Innovative HR practices, training, and involvement and empowerment of the

staff.
REASONS FOR LOSES
Defective credit appraisal
Absence of proper risk management
High credit without proper analysis
Improper mergers and acquisitions
Loss of good existing customers
Poor monitoring and cost of quality

Fall in earnings
Misuse of powers (zonal managers
providing credit exceeding their limit)
Selective sanctions by top
management
Fear psychosis
TURN AROUND STRATEGY
Restructuring the banks structure:
NPA Management :
Credit management:
Extensive planning:
Motivating the staff:HRD
Corporate governance
Marketing
Technology up gradation
10
SUCESSFUL TURNAROUND
Restructuring of to make operations simpler and to ensure speedy decision-making.
Branch segmentation to cater t the needs of various target markets.
streamlined structure, several branches across the country were also merged.
To pare down excess staff and making the organization leaner Bank implemented VRS.
Bank took advantage of the 'securitization' Act to bring down the huge NPA levels .
Bank began focusing on retail products.
11
Performance improvement
1000
800
600
400
200
0
2000
2001
2002
2003
2004
-200
-400
-600
12
REFERENCES
www.indian-bank.com
A New Beginning-The Turnaround Story Of Indian Bank-By Ranjana Kumar
The Turnaround of Indian Bank, case study IBS Center for management
research, case code- BSTR104
Resurrecting a Bank: Key Lessons From the Turnaround of Indian Bank,
Volume 16, Number 1 Article by Ashok Thampy
13

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New Beginning of Indian Bank

making company into a

INDIAN BANK : A PHOENIX

Soon after restructuring the loss making bank was ranked as

Retirement as Chairperson of National Bank for

generations with it.

WHAT WENT WRONG .?

Banks CREDIT-DEPOSIT RATIO grew disproportionately to 64.6 percent as

The Bank started incurring huge loss from 1993-94

The Bank started incurring losses from 1993-94

THE NEW BEGINNIG

loopholes first exposed by the introduction of the new banking norms.

Ensured accountability and put pressure on the bank to perform.

Innovative HR practices, training, and involvement and empowerment of the

REASONS FOR LOSES

Defective credit appraisal

Absence of proper risk management

High credit without proper analysis

Improper mergers and acquisitions

Loss of good existing customers

Poor monitoring and cost of quality

TURN AROUND STRATEGY

Restructuring the banks structure:

Motivating the staff:HRD

A New Beginning-The Turnaround Story Of Indian Bank-By Ranjana Kumar

Resurrecting a Bank: Key Lessons From the Turnaround of Indian Bank,

Volume 16, Number 1 Article by Ashok Thampy

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