Chennai, July 29 (IANS) Chennai-based public sector Indian Bank has decided to raise up to $500 million loan shortly for its overseas operations, the bank's chairman said here Friday.

Speaking to reporters, chairman and managing director T.M.Bhasin said: "The bank board has approved raising up to $1 billion medium term loan. We have conducted the road shows. We will be raising anything between $350-$500 million in the first tranche."

About its utilisation, Bhasin said: "The loan funds will be used for funding our overseas branches in Sri Lanka and Singapore. Our advances there will go up to Rs.2,250 crore."

Speaking to IANS, executive director Rajeev Rishi said the bank plans to have a branch in Hong Kong and three more branches in Sri Lanka.

"We will have around six branches in Sri Lanka. India's assistance for the rehabilitation of Sri Lankan Tamils will be routed through our bank," he said.

Rishi said the bank is chalking out a new strategy for its merchant banking subsidiary while winding up its housing finance and mutual fund subsidiaries.

On the bank's plans for foray into life insurance sector, he said: "We are waiting for IRDA's (Insurance Regulatory and Development Authority) guidelines on bancassurance. Once that is finalised, we will look at options - taking a stake in a life insurance company or be just a corporate agent."

Indian Bank closed the first quarter of the fiscal 2011-12 with a net profit of Rs.406.9 crore and a total income of around Rs.3,030 crore as against Rs.368.14 crore and Rs.2,477 crore earned during the corresponding period of the previous year.

The bank's increase in net profit is largely due to reduction in provisions by Rs.167 crore to around Rs.176 crore during the first quarter as against the provision of around Rs.343 crore made during the corresponding period of the previous year.

Officials told IANS that the reduction in the provisions during the current year's first quarter is owing to reduced non-performing assets (NPAs).

According to Bhasin, the bank, during the period under review, posted a total business of around Rs.192,934 crore (advances Rs.82,509 crore, deposits Rs.110,424 crore) as against Rs.159,027 crore (advances Rs.68,027 crore, deposits Rs.91,000 crore) posted during the corresponding period of previous year.

He said the bank's net interest income rose by 13.9 percent during the period under review to touch Rs.1,030 crore.

Bhasin said the bank's gross NPA to gross advances ratio declined to 0.98 percent from 1.45 percent in 2010-2011.

The net NPA to net advances ratio too decreased to 0.51 percent from 0.76 percent.