Indian Bank Doubles Down On AI: MD Binod Kumar On CASA Surprise, Treasury Gains, Conversational Banking in Q1

Indian Bank's better-than-expected performance in the first quarter of financial year 2026-27 was driven by steady loan growth, a surprise surge in CASA and a sharp beat in treasury income, according to Managing Director and CEO Binod Kumar. Net Interest Margin (NIMs) also supported the PSU lender, as Kumar continued with his strategy of "selectively raising resources and lending."

While the Chennai-based bank is drawing headlines for its double-digit profit growth and strong margins, it is also planning to introduce an artificial intelligence-powered conversational feature in its mobile banking app very soon, Kumar hinted in an exclusive conversation with Goodreturns.

Indian Bank, on Friday, reported a 10% annual rise in its net profit to Rs 3,273 crore in Q1FY27. Its gross advances increased 13.89% and deposits surged by 13.47% anchored by a robust CASA share of 39.37%. "CASA growth has been very good, and we have taken various measures to support it. NIMs have also held up well because I remain very selective in both raising resources and lending," Binod Kumar told Goodreturns.

"NII has also grown by almost 17%. NIA and operating profit have delivered better than expected growth. Treasury performance has also been strong as treasury yields had risen to around 7.5-7.7%, but eased to about 6.75% following the truce in the war just before the quarter-end," he added.

CASA Surprise, Treasury Gains in Q1

CASA growth, which stands for Current Account and Savings Accounts growth, came in at 15.3% in Q1FY27, which was well above expectations. Binod Kumar credited various measures the bank had taken to boost low-cost deposits. In CASA, the savings fund grew by 13.54%, the current account grew by 26.33%, and the overall and CD ratio domestic stood at 78.66%.

While CASA growth remained healthy, treasury income delivered a much bigger surprise. Treasury income, I was expecting between Rs 250 crore and Rs 300 crore, but actually it went up to Rs 500 crore," Kumar said. He attributed a part of the treasury income surge to a truce in the war just before the quarter-end that pulled bond yields down from around 7% to 6.75%. Asked whether this performance could be sustained in the coming quarter, he said "I expect that there will be no rate cut, no rate hike, if that be the case, treasury income should remain in this range only."

Indian Bank's AI Adoption

Indian Bank is bringing artificial intelligence-backed services and facilities on multiple fronts, whether it is imparting knowledge or FRM solution. Implementation of conversational AI in mobile banking is also in pipeline which would let customers to make transaction with a command.

"We are taking a new FRM solution... For knowledge imparting to our employees, we are already using AI. But one thing I will especially mention... I am planning conversational AI, so that anybody can make a transaction by just giving a command."

Asset Quality Improvement, Loan Growth

Reduction in gross non-performing assets (NPAs) is one of the key highlights of Indian Bank Q1 results. Gross NPA improved by 115 basis points from a year earlier, driven by MSME segment.

Highlighting a large corporate loan pipeline, Binod Kumar mentioned fresh financing demand from data centres, renewable energy projects and even warehouses. "I have a pipeline of Rs 53,000 crores. I have written up loans in Q4FY26 of Rs 8 000 crores. We are seeing meaningful demand in data centres and all things related to renewable energy, whether it is solar power, whether it is battery, whether it is transmission line."

FCNR (B) Deposit Target With Aim At Cutting Costs

Indian Bank has raised nearly $ 150 million in Foreign Currency Non-Resident (Bank) FCNR Deposits under the Reserve Bank of India (RBI) special scheme. Kumar said that the PSU lender is targeting to raise $ 2 billion by the end of the drive. "So, $2 billion means approximately Rs 19,000 crore, and that will go towards lowering the cost. Partly, you can say around Rs 12,000-13,000 crore will go towards shedding some bulk, and the rest will go towards the growth of credit," he told Goodreturns.