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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.

The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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 )
The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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) .
The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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.


The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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 New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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 Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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.
The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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

The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

TURN AROUND STRATEGY

Restructuring the banks structure:

NPA Management :

Credit management:

Extensive planning:

Motivating the staff:HRD

Corporate governance

Marketing

Technology up gradation

The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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.

The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

11

Performance improvement
1000
800
600
400
200
0

2000

2001

2002

2003

2004

-200
-400
-600

The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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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

The New Beginning of Indian Bank -A Case Study On Turnaround Story of Indian Bank

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