Idbi Discusses Universal Banking

Financial institution Industrial Development Bank of India (IDBI) today discussed its long-term strategy of moving towards universal banking and called for a change in prudential norms to include infrastructure lending as part of the priority sector.

Executives said IDBI targets to reduce the level of non-performing assets (NPAs) to below 10 per cent by March 2002 from 14.8 per cent at the end of the last fiscal.

IDBI executives met finance secretary Ajit Kumar and ministry officials here today to appraise the government of its financial position and the measures being undertaken to shore up the institution's bottomline.

The meeting with the finance secretary was followed by another meeting with senior officials of the ministry.

For smooth transition to universal banking, enabling IDBI to go for both term lending and working capital finance, the Reserve Bank of India has been requested to change the prudential norms apart from treating statutory liquidity ratio (SLR) and cash reserve ratio (CRR) on an incremental basis so that the institution can conform with the prudential norms for banks.

As part of its short-term plans, IDBI told ministry officials that it would tap the markets within the next couple of months to raise about Rs 3,000 crore this fiscal.

"We would raise about Rs 10,000 crore during the fiscal of which about Rs 3,000 crore have already been raised," a top IDBI executive said.

The board has approved the proposal to raise Rs 3,000 crore through bonds issues with an interest of about 9-10 per cent.

The bonds issues would help IDBI shore up its disbursement and sanctions this fiscal. Last fiscal, the FI sanctioned loans worth Rs 28,711.10 crore, while disbursements were Rs 17,498.30 crore.

"We would give more to one-time-settlement (OTS) to recover sticky assets," an executive said.

NPA reduction would, however depend on a number of factors including the state of the economy which would determine the health of the sectors where IDBI has substantial exposure, he added.

IDBI's net profit decreased by about 18 per cent to Rs 691 crore during the first quarter of the current fiscal as against Rs 947 crore in 1999-2000.