The Hindu Business Line : IDBI mulls expansion at home and abroad

IDBI hopes to increase its branch strength to 200 by end of March 2006 and to 500 by 2008. The bank also hopes to increase its ATMs to 500 before the end of the current fiscal, said Mr V.P. Shetty, Chairman. Currently, branch strength stands at around 170.

Speaking at the first AGM after the merger of IDBI and IDBI Bank, Mr Shetty said that the average cost per branch would be around Rs 40-45 lakh of capital expenditure and Rs 5-8 lakh of revenue expenditure.

IDBI is also looking at overseas expansion and has set up a special team to look into possible locations for new branches.

"We do feel handicapped to an extent due to the lack of an overseas branch. We are not reaching emerging markets worldwide," Mr Shetty said.

About the bank's insurance foray, Mr Shetty said that a final decision would be taken within three months about the nature and composition of the venture and the likely partners.

"We have been discussing getting into insurance for two years. But we need to be careful, as it is capital-intensive. We are looking at various options. We have not decided on the business model."

In order to bring down the cost of funds, the bank will focus on low-cost deposits. "Our cost of funds is around eight per cent, while the industry average is around eight per cent. We need to bring down our cost of funds," Mr Shetty said.

Deposit rates are likely to become tighter and may see an upward movement of 10-25 basis points in 6-9 months, he added. Lending rates are also likely to see an upward trend on account of Government borrowing and liquidity getting tighter, he said.