The Hindu Business Line : IDBI eyes second largest bank slot in short-term: Damodaran

IDBI Ltd in its new avatar beginning today, is expected to become the second largest commercial bank in the country in the short-term, and inch closer to the Number one in the medium-term, according to Mr M. Damodaran, Chairman, IDBI.

The business model of the bank, post-merger with IDBI Bank, which is scheduled to be completed in the current fiscal, envisages two strategic business units. While one SBU will focus on development finance (corporate banking), the other SBU will cater to commercial banking needs, the stress being on retail.

Addressing a press conference here on Friday, Mr Damodaran said: "Post-merger, we will again look at inorganic growth, particularly at banks having overseas presence." Referring to the size of the bank, he said it would have significant presence with the IDBI offices also getting converted into branches.

The bank is expected to get flexibility in priority sector lending obligations. As per the RBI rules, the bank needs to lend 40 per cent of its advances to priority sector, including agriculture.

Responding to queries on the asset quality, Mr Damodaran said IDBI has transferred Rs 9,000 crore to the Stressed Assets Stabilisation Fund (SASF) from the total NPAs of over Rs 13,000 crore. This includes Rs 1,200-crore loan to the Dhabol Power Company. About Rs 900 crore of the company's NPA is still with the bank as it is considered recoverable.

On the IDBI's performance, he said in the current year so far the bank has sanctioned credit worth Rs 5,000 crore. This includes Rs 500 crore sanctioned to NTPC on Thursday and another Rs 700 crore to another company .

On the resource side, IDBI will be raising another Rs 5,000 crore in the next six months. This includes $300 million by way of FCCBs. The bank has so far raised Rs 4,600 crore with a 3-4 year maturity at an average cost of 5.7 per cent.

IDBI, which is looking to bring down its average cost of funds from 9 per cent to 8 per cent, has set itself the target of emerging as the most preferred bank for total financial and banking solutions, both for corporate and individuals and a name to reckon with in institutional finance both at home and abroad.

Meanwhile, Mr Narendra Singh Sisodia, Mr Vinod Rai, Mr M. Damodaran and Mr S.B. Mathur have been appointed as trustees of the SASF.

Mr Damodaran has been appointed as the wholetime chairman of the banking company, and a director on its board, while Mr Ashok K. Jha, Mr Narendra Singh Sisodia, Mr Shekhar Datta, Mr K. Narasimha Murthy, Mr R.V. Gupta, Mr Hiralal Zutshi have also been appointed as directors, said a stock exchange notice.

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