IDBI moots ESOP plan

May tap market next year for capital.

Industrial Development Bank of India (IDBI) is working on a scheme to issue stock options to compensate and retain employees in the highly competitive financial sector.

The public sector bank is working on details and will move a proposal to government for ESOP scheme, Chairman and Managing Director Yogesh Agarwal told reporters after launching its International Debit MasterCard on Monday.

The proposed scheme may cover employees from substaff to top officials like the chairman, he said.

IDBI Bank, erstwhile private bank floated by IDBI and now merged with parent, had a similar scheme prior to the merger in 2005.

The scheme was to remain in operation for three years (March 2008).

Referring to credit growth and need for capital to support asset expansion, he said credit pick-up in October-December 2007 has been good but it does not need additional capital in 2007-08 as its capital adequacy ratio at 14.10 was adequate to support asset growth.

The bank may think of approaching market for capital in 2009, Agarwal said. He, however, did not dwell on the details. The bank is expanding its reach and product portfolio and has recently reworked is structure by scrapping the Strategic Business Units.

Now, IDBI bank will focus on six customer segments "" three for corporate banking and three on the retail side.

Agarwal said bank has applied to Reserve Bank of India to open 200 new branches and set up 300 more ATMs. At present, it has close to 500 branches and 700 ATMs.

Besides working on organic growth (natural expansion of network), it will look for inorganic opportunities (acquisitions), since bank has experience of absorbing to two private banks "" IDBI Bank and ailing United Western Bank, he added.