IDBI plans to foray into private equity, mutual fund in a year

IDBI Bank Ltd is planning an asset management company (AMC) which is likely to be operational in a year.

"We are planning to get into private equity venture and have sought permission from the Reserve Bank of India. We have long experience in the business," IDBI chairman and managing director Yogesh Agarwal said here today on the sidelines of a FICCI-organised banking conclave.

The bank has received RBI clearance for the AMC which was expected to begin operations.

The bank was not looking for any partner for the mutual fund business, he said.

Speaking about business growth target, Agarwal said the bank was expecting credit growth of 18 per cent and 20 per cent in deposits during the current fiscal.

In 2008-09, the bank's credit and deposit expanded by 26 and 56 per cent respectively.

"Expansion of base and slow growth are the reasons for lower growth projections," the chairman said.

The bank was expecting to improve its net interest margin to one per cent from 0.8 per cent currently.

The bank has headroom for Rs 600-700 crore tier II capital which would be utilised as required, Agarwal said.

The bank had sought Rs 8000 crore as recapitalisation from government, but was yet to get any support so far.

Asked about its plan to seek refinance from India Infrastructure Finance Company, Agarwal said its exposure in infrastructure was Rs 40,000 crore and was waiting for the scheme to be unveiled.

Speaking about interest rates, Agarwal said it had bottomed out. From September onwards interest and deposit rates were likely to harden slowly.