The Hindu Business Line : Indian Bank to revive Indbank Merchant

Two factors have influenced this decision. First, Indbank's balance sheet has been bolstered by the buoyancy in the share prices of Punj Lloyd. Indbank has 5.4 lakh shares of the company, acquired at a cost of Rs 92.5 a share. On Friday, Punj Lloyd closed at Rs 1,144 on the National Stock Exchange. At this price, the value of Indbank's holding works out to over Rs 60 crore.

Second, Indian Bank is likely to get a licence for offering Depository Participant (DP) services. With the DP facility in the parent bank, Indbank's stock broking and merchant banking activities could be strengthened, officials believe. With stock markets booming broking services would fetch good business, sources said.

They pointed out that Indian Bank has a pan-India presence and Indbank Merchant can ride piggyback on the parent bank's branch network. Not much investment is required to restart the operations of the subsidiary.

It is learnt that the Punj Lloyd shares with the bank are under a one-year lock-in period.

It is not clear — officials do not want to comment on this — whether there could be a reversal in provisions in 2005-06, or only in the next year.

In the first three quarters of the current year, Indbank made a net profit of Rs 69.70 lakh compared with Rs 2.45 crore in the same period last year. However, in the final quarter of last year, the company made a net loss and reported a net profit of Rs 1.5 crore for the full year 2004-05.

Indbank had on March 31, 2005, accumulated losses of Rs 97 crore, down from Rs 99 crore in the previous year.