Abstract

The case discusses the turnaround of the Indian Bank, a prominent public sector bank based in Chennai, a south Indian city. The Indian Bank was established in 1907 and was nationalized by the Indian Government in 1969. The bank functioned reasonably well with the aid of the government, till prudential norms were introduced for public sector banks in 1992. While the new norms caused most of the public sector banks in India to falter, the Indian Bank posted an industry record loss of Rs 1336 crore in the fiscal year 1995-1996. In 2000, the bank undertook a comprehensive restructuring program under the guidance of Ranjana Kumar, known in Indian banking circles for her ability to turnaround hopeless banking situations. After a restructuring program that involved considerable changes in structure, operations and human resources, the Indian Bank managed to turnaround by posting its first net profit in six years for the fiscal year 2001-2002. Plans were also on the anvil for a public issue in 2005.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Reasons for the decline of a prominent public sector bank.

Keywords

Indian Bank, public sector bank, Chennai, south Indian, 1907, nationalized, Indian Government, 1969, government, prudential norms, loss, Rs 1336 crore, fiscal year, 1995-1996, restructuring, Ranjana Kumar, Indian banking, banking situations, operations, human resources, net profit, six years, public issue, 2005