IDBI Bank scouts for stressed asset fund partner

Public sector IDBI Bank is exploring a tie-up with a stressed asset fund to tackle big-ticket non-performing loans. An IDBI Bank executive said while NPA restructuring was a continuous activity, the focus was now shifting to resolution of six large cases.

The bank is talking to two entities for an arrangement that goes beyond haircuts and provisioning. The emphasis was on bringing the units back on track, the executive said. He declined to elaborate on plans or name the parties the bank was talking to.

IDBI Bank's gross NPAs swelled to 13.05 per cent (Rs 30,133 crore) of the loan book in the September quarter from 6.92 per cent (Rs 14,757 crore) in the same quarter a year ago. Gross NPAs were at 11.92 per cent (Rs 27,275 crore) of the IDBI Bank loan book in the June quarter.

Banks' efforts at resolution of stressed loans is gathering pace. The State Bank of India (SBI) and Brookfield Asset Management Inc will form a joint venture to drive investment into stressed assets. While Brookfield has committed Rs 7,000 crore, India's largest lender will chip in with Rs 350 crore as initial investment. SBI will also commit to earmarking 5 per cent of its total investments for stressed assets. ICICI Venture, a unit of ICICI Bank and Tata Power, has created a platform to facilitate investment in power projects that are nearing completion or are operational. The platform will raise up to $850 million, to be contributed by sponsors and partner investors, either directly or through their affiliates.

Chanda Kochhar, chief executive and managing director, ICICI Bank, said asset sales of Rs 1.5 lakh crore had been finalised in the last two years, the largest in Indian corporate history. These are sales of assets in sectors such as roads, power and cement.

"We have to understand that each one of these resolutions takes time. The kind of results we see now are probably the result of two years of working on those deal," Kochhar said.