Idbi Alters Its Targeting Method

The Industrial Development Bank of India (IDBI) has decided to set annual targets by focusing on the bottomline rather than sanctions and disbursements, for each of its branches.

This was decided in the annual strategy meeting which took place at IDBI Towers here last Saturday and Sunday.

The management of IDBI and the chief of all branches met to review the institution's performance for the last fiscal and also discussed the strategy and annual target for the year.

"Traditionally, the institution has been focusing at sanctions and disbursements target for the year. But this year the focus is shifted towards profitability," said IDBI officials.

"Although there is no standard way of measuring profits, the performance would be viewed based on two parameters _ ability to reduce the cost of funds and lower the non-performing assets (NPAs) at their branches and at same time curtailing their growth," they added.

According to senior IDBI officials, the institution has also decided to focus on three issues which are considered crucial for its growth. These include management of non-performing assets (NPAs), employee morale and profitability.

On NPAs, it was decided that the organisation should provide a "special concentrated effort" in reducing and curtailing NPAs as it has touched 13 per cent during fiscal 1999-2000.

It was also decided to accelerate the growth of assets by funding corporate loans instead of sticking to project financing.

The FI would focus on corporate finance _ such as short-term financing, working capital loans and equipment financing instead of funding the traditional grassroots projects.

During the current year, the institution has taken a view that disbursement in the power and telecom sector will take off in a big way as most of the projects are expected to achieve financial closure.

In the meanwhile, the focus continues to be on ways to reduce cost of funds and approach towards universal banking.