IDBI Bank rejigs corporate biz

Public sector lender IDBI Bank has reorganised its corporate banking business to rationalise operations. It has merged large corporate and mid-sized corporate groups.

Following such a change in structure, which became effective from July 1, 35 branches that were separately dealing with big-ticket and mid-sized companies will be available for servicing corporate clients.

This has been done to improve coordination, better usage of skilled human resources and provide more service points across country, according to a senior bank official.

The Mumbai-based bank will, however, continue to keep operations of the infrastructure corporate group (ICG) distinct. ICG is the core strength of the erstwhile development finance institution. The loan book of three businesses — large, mid-size and infrastructure groups — was Rs 1,23,588 crore at the end of March, up from Rs 1,05,713 crore a year ago.

Another IDBI official said the shift in business emphasised moderation in corporate business in the backdrop of an ongoing economic slowdown has also led the management to review strategy.

After conversion into a commercial banking entity, the bank moderated its expansion of the loan book in the corporate segment. While the bank wants to reinforce and gain from the wholesale side, it would like to prune the share of corporate banking to 50 per cent by 2015-16.

Going slow in expanding the corporate loan book is also a strategy that has been chalked to address the challenge of priority sector lending (PSL) targets. The bank finds it difficult to reach targets with a limited branch base. After becoming a commercial bank, IDBI has an obligation to meet the 40 per cent target of PSL, including agriculture and micro and small enterprises.

Its credit grew by 15.3 per cent to Rs 181,158 crore in 2011-12. The bank has followed a calibrated policy of growing the loan book by 15 per cent since FY11, focusing on improving profitability than just growing loan portfolio. It has set an aim to expand the loan book by 15 per cent in 2012-13.