IDBI raising $200 mn in overseas loans

IDBI Bank is in the process of raising as much as $200 million in syndicated loans from overseas.

The bank was doing road-shows in Singapore, Taipei and Hong Kong and expected to raise the amount later this month, Melwyn Rego, executive director and head of international banking, told Business Standard.

The three-year syndicated loan was being arranged by BNP Paribas, Standard Chartered Bank and Royal Bank of Scotland, he said.

The amount would be raised overseas by IDBI’s Dubai branch, which would then disburse it mainly to Indian companies, he said. In January, the bank raised $100 million when the branch opened at the Dubai International Finance Centre.

In July, the bank completed its $350-million bond sale to overseas investors in 5.5 year bonds. It has about $550 million of outstanding overseas borrowings, mainly in bonds.

The bank planned to open an offshore banking unit in Singapore and might seek presence in Hong Kong too, he said.

The bank, which opened 31 branches on October 1, planned to increase the number of its domestic branches to 1,000 in a year from the present 730, a senior official said.

IDBI planned to increase the proportion of its retail banking to 50 per cent from about 30 per cent at present, Chairman RM Malla said.

The bank also plans to focus on raising funds mainly in the current accounts and savings accounts (CASA) to beef up its lower cost deposits.

It aimed to raise CASA deposits to 20 per cent of total deposits by March 2011 from 15 per cent in March 2010, he said. The bank was looking at raising CASA to 30 per cent within three years, he added. The bank was likely to grow its loans by about 18-20 per cent in the year to March 2011, Malla said, adding there was a strong demand for loans from across sectors.

The bank’s provisioning coverage ratio stood at 74 per cent, higher than the 70 per cent level recommended by the Reserve Bank of India.