The Hindu Business Line : IDBI to go ahead with insurance venture plans

Kolkata, Aug. 16 IDBI, part of the consortium that had lent money to the Dabhol project, has no plans to step up exposure to it, the willingness reportedly displayed by NTPC to do the same notwithstanding.

IDBI may not be in a position to bring in more funds to the project at this stage, Mr Yogesh Agarwal, Chairman, observed. The comment assumes significance in the current context, marked as it is by the possibility of Dabhol’s revival, as enunciated recently by the NTPC authorities. He was talking to newspersons after addressing a meeting organised by FICCI on Thursday.

NTPC, which holds over 20 per cent in Ratnagiri Gas and Power, which has the Dabhol plant, is said to be considering an equity infusion. An additional Rs 500 crore is being talked about – a plan aimed at partial funding of an LNG terminal. GAIL (India) Ltd is also a prominent stake holder in the company.

Growth targets

Earlier, Mr Agarwal outlined IDBI’s plans to achieve key growth targets, ones that pertained to branch rationalisation, increasing retail assets and insurance.

“We are going ahead with the insurance proposal. An application to the Insurance and Regulatory Development Authority (IRDA) has been sent,” he said, adding that a plan to enter the asset management business was under consideration. An entry into asset management, incidentally, will mark IDBI’s second foray on this front.

IDBI intends to step up its retail business, which now constitutes a small part of its overall exposure. This, in future, is expected to become a bigger contributor; its balance sheet size currently stands at over Rs 1,00,000 crore.

There is a plan to rationalise branches as well, the IDBI chief said with reference to the 450-plus branches in its network. The latter includes those under the erstwhile umbrella of United Western Bank. However, there is no immediate plan to reduce the number of branches, he clarified.

IDBI Capital, among its subsidiaries, will step up its focus, it is pointed out.

May raise Rs 300-cr medium-term loan

IDBI may raise up to Rs 300 crore by way of a medium-term instrument, Mr Agarwal said, adding the current capital adequacy (14 per cent) is comfortable. No equity issue is being considered at the moment.

“In a competitive scenario, we will need to raise and lend money at market rates,” he told newspersons while referring to IDBI’s targets with regards to deposits and advances.

IDBI, which was not long ago considered as a ‘development financial institution’, is looking at ways of reducing its cost of funds. “DFIs as we knew them will have no role in this market. Competitive rates have become more important in today’s context,” he said.

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