Bcg Presents Universal Bank Plan To Idbi

The Boston Consulting Group (BCG) is presenting a road-map before the top brass of the Industrial Development Bank of India (IDBI) on the institution's transition to a bank over the weekend.

Originally, the discussion was slated to take place in cooler climes of Lonavla. The venue got shifted to the IDBI Towers, the institution's headquarters in south Mumbai.

As part of its efforts at effecting this transformation, whereby it will provide the A-to-Z of financial products and services under one umbrella, the term-lending institution had set up a steering committee consists of -- OV Bundellu, Jitender Balakrishnan and K Kameshwara Rao-- to look into the matter. They are the interface with the management consultant.

In the run-up to preparing a final report on universal banking, a BCG team visited IDBI's regional offices and also met senior officials of the institution to have a first hand knowledge of its working.

According to sources, the institution has two routes for becoming a universal bank. It can either merge itself into IDBI Bank or takeover a bank.

The FI had earlier appointed Athreya Committee last year to pen the restructuring of the organisation. According to the report around 35-40 per cent of the business of the institution should come from term lending business, another 30-35 per cent from fund based other banking activities while the balance should come from non-fund based activities by 2004.

However, even after the report was submitted by the committee no action had been taken. The non-fund income of the institution seems to be falling down.

Within universal banking, the FI wants to concentrate more on corporate side of the business than on the retail business. It wants to provide the entire gamut of services from investment banking, treasury to even short term loans.

It is also looking for a partner for its foray into life insurance. However given the high level of NPAs, it remains to be seen whether the Reserve Bank of India gives the go-ahead.