IDBI Bank defends lending to Kingfisher

"The CBI enquiry relates to the advance made in 2008-09. This was the time when Kingfisher was doing well," the CMD said

Coming under CBI lens for advancing Rs 950 crore loan to Vijay Mallya controlled Kingfisher Airlines, public sector lender IDBI Bank today said it will submit some additional particulars to the investigating agency in a couple of days.

“The CBI has asked for some particulars to us. We have provided some particulars and will be offering some more in a couple of days,” IDBI Bank’s chairman and managing director (CMD) M S Raghavan said here, refusing to disclose details.

Raghavan, however, defended the bank’s decision to disburse the loan to Kingfisher Airlines during 2008-09.

“The CBI enquiry relates to the advance made in 2008-09. This was the time when Kingfisher was doing well,” Raghavan said even as IDBI Bank’s share tumbled 5 per cent on the NSE to touch a low of Rs 79.35 amid CBI launching probe into the bank’s Rs 950 crore loan to the debt laden airlines.

Raghavan clarified that the banks’ credit committee then did not oppose sanction of loan to the Kingfisher Airlines, which has not been operating since October 2012. Asked on steps taken to recover the loan from the airlines, he said, “State Bank of India (SBI), the consortium leader has the main exposure to the airlines with Rs 1,700 crore. The consortium leader is making efforts to recover the amount.” Denying any immediate acquisition plan, Raghavan said, “There is talk of consolidation in the banking sector in the finance ministry. But as of now, this is only a speculation as there is no proposal or concrete guidelines.”

Aiming to rejig its loan portfolio, IDBI Bank has decided to curb lending to the infrastructure sector. “We have an exposure of Rs 53,000 crore to the stressed infrastructure sector and the bank has decided to restrain lending to this sector. But we are not stopping loans to infrastructure and once it is out of stress, we will revive loans to the sector,” the bank CMD said.

Raghavan admitted that the bank has exposure to Bhushan Steel but did not share the figure. Bhushan Steel is in the eye of a storm after CBI recently arrested its vice chairman and managing director Neeraj Singhal in connection with the alleged Rs 50-lakh bribery scandal involving Syndicate Bank CMD S K Jain.

The bank said it had cut its corporate lending by Rs 19,000 crore in 2013-14. The share of corporate credit to the bank’s total advances has fallen to 72 per cent in 2013-14 from 78 per cent in the previous fiscal. The balance 28 per cent is contributed by credit to priority sectors.

The outlook for corporate lending is expected to be tepid this fiscal as well.

“Our corporate lending would grow by only 5-6 per cent in 2014-15. By the end of this fiscal, we are targeting to raise our credit offtake to priority sectors to 40 per cent from 28 per cent currently and also scale up lending to agriculture sector from four per cent to 18 per cent Our focus is on affordable housing, agriculture and retail loans,” said Raghavan.