Idbi Puts 30 Big Accounts On Watchlist
The beleaguered Industrial Development Bank of India (IDBI) has put 30 of its large corporate accounts on the watchlist and will monitor them on a day-to-day basis.
Topping the list is its Rs 2,300 crore exposure to the Dabhol Power Company (DPC) which is a potential NPA. The other major accounts on the watchlist are its clients in the power, steel and textile sectors, besides its exposure to the much-delayed Haldia Petrochemicals.
"We have already kicked off the process of monitoring these accounts. The decision has been taken in the context of declining profits, unsustainability of the present model of development financial institutions and the move towards becoming a universal bank," confirmed a senior IDBI official.
IDBI which was the premier financial institution till two years ago has steadily lost ground, and the top slot has been claimed by ICICI. The institution has been saddled with a high NPA level of over 14 per cent. It has been specially hit by huge exposure levels to sectors like steel where companies have defaulted.
The institution has also decided to embark on an aggressive recovery drive and improve the quality of its assets. It has decided to increasingly settle for one time settlement (OTS) of dues and reduce NPAs where total recovery is not possible.
In OTS cases it has decided not to insist on inserting a recompense clause where the full payment is offered and there is no sacrifice on principal or no provision to convert debt into equity.
The institution has decided to improve the OTS route further by obtaining two independent valuations in the case of combined FI exposure of over Rs 50 crore.
In an attempt to shore up its asset base, IDBI is planning to increasingly lend to AAA\AA+ borrowers and is even willing to settle for small returns as a trade-off.
IDBI has also decided to strike an independent path in the case of consortium financing with less than Rs 10 crore and pursue recoveries on it own. In the case of consortium lending of over Rs 20 crore, it has decided to take decisions on the basis of consultations with other financial institutions.
The other decisions that have been initiated to put the institution on the recovery path is to resort to increasingly to corporate debt restructuring and constitute a special cell for this and cut costs by 30 per cent. The institution is also looking at the possibility of borrowing in yen at a floating rate and repaying at fixed rate.