If you are an Industrial Development Bank of India (IDBI) executive working at the headquarters, you may have to do without the dessert for your daily office lunch even though you are not advised by your doctor to do so. At best, you can have a banana for dessert, that too once a week. Yes, that's the rule at the IDBI officers' canteen now. It's part of a major cost-cutting drive.
Cutting down the interest cost is not enough for the institution. After recalling high-cost long bonds, the financial institution is now launching a massive cost-cutting drive. It is looking at cutting down expenses by 30 per cent.
The daily dessert is off. So is subscription to foreign journals as well as to many newspapers.
Other things that are coming under this cost-cutting drive include travel expenses, telephone bills, stationery, etc.
The financial institution is also taking a hard look at its real estates. The Mumbai branch as well as the western zonal office of IDBI are being relocated at the headquarters. The institution is vacating three floors of Nariman Bhavan at Nariman Point in Mumbai, thereby saving around Rs 4 crore annually.
It has also now started surrendering some of the lease flats which it had taken for senior officers. Sources said the institution currently has surplus flats and these executives could be accommodated there. A few years back, it had taken a plot in the Bandra-Kurla complex. Though there was a decision to build an office complex there, the decision was subsequently shelved.
IDBI has also been aggressively cutting down interest expenses. The incremental cost of funds had already been bought down to 10.1 per cent from 11.1 per cent in the previous fiscal. In this fiscal, it is planning to redeem around Rs 3,000 crore this year while, in the previous year, it had redeemed bonds of around Rs 3,729 crore. The redemption of bonds in the previous year would help the financial institution boost its bottomline by around Rs 200 crore in this fiscal.
Some of the IDBI executives are unhappy at the management's cost-cutting decision. "The cutting down of interest expenditure and relooking at the real estate expenses are welcome. However, the salaries are already the lowest in the industry. The slashing of telephone allowances and such other petty expenses is not going to make any significant changes other than creating more frustration," said an insider.