Chennai-based Indian Bank has devised a consolidation strategy that involves growth by way of acquisitions and also a public issue offering.

Addressing a press conference in Hyderabad on Saturday, M B N Rao, chairman and managing director, Indian Bank said, "The bank is evaluating two to three 'options' for 'consolidation'. This is part of the effort aimed at inorganic growth and the process is expected to be completed in the next 12 months."

According to him the bank was open to acquiring either a public or private sector bank that offers greater synergy of operations. He said that an internal team is currently involved in scouting for acquisition targets.

"We are looking at consolidating our market position in west and north India and the target banks could be those having a major presence in these regions," he said. The bank is expected to take the proposal to the government once it formalises its plans.

Indian Bank has also taken several steps to reduce its non-performing assets to 2.25 per cent riding on high cash recoveries. The bank's net NPA has climbed down from Rs 754 crore (Rs 7.54 billion) last fiscal to Rs 359 crore (Rs 3.59 billion) as on September 2004.

The bank has also decided to adopt a core-banking package, to be implemented by TCS, for its 500 branches within the next 12 months. "We have already conducted a pilot project in two branches of Tamil Nadu," he added.

Expenditure on this is likely to be about Rs 25 crore {Rs 250 million) Rs 5 lakh per branch}. The bank also plans to add 150 ATMs and open 20 more branches soon.

The bank has also formulated a plan that involves doubling its business size from Rs 50,000 crore (Rs 500 billion) to Rs 1,00,000 crore (Rs 1,000 billion) by 2007. The bank has in particularly stepped up focus on agricultural lending and it proposes to double the figure by 2007.

"We have hired 100 agriculture graduates and tied up with tractor companies (Tafe and Mahindra and Mahindra) for easy finance and scaled up finance for paddy and sugarcane growers. In Andhra Pradesh, we have added 247 new farmers per branch as part of our agricultural advances," Rao said.