IDBI Bank hopes to sell IHFL by Feb

State-run IDBI Bank today said that it expects to sell its Pune-based home loan subsidiary IDBI Home Finance (IHFL) by the end of this month. The bank had earlier deferred its sale, citing requirement of more information about prospective buyers.

“We had deferred the plan (to sell the subsidiary) earlier as our Board felt more information about prospective buyers was needed. Our sale plan is very much on,” IDBI Bank’s Chairman and Managing Director Yogesh Agarwal said here. Though the board has not set any time frame for the sale, it expects to seal the deal by the end of February, Agarwal said.

 

IDBI Bank’s Board had met on January 23 to discuss and announce the buyer from among three contenders — Dewan Housing, Religare Enterprises and Tata Capital.

According to IDBI Bank sources, Dewan Housing has put in the highest bid.

IDBI Bank decided to sell its home-loan subsidiary with a view to consolidate its housing finance business, which is currently being rolled out by both the bank and IHFL, thereby resulting in competition between the two.

The bank acquired the erstwhile Tata Home Finance in 2003 to exclusively sell housing loan products. IHFL clocked a net profit of Rs 30 crore in FY08 and has a home loan portfolio of Rs 2,700 crore.

IDBI Bank had initially received 10-12 proposals from various companies for IHFL, from which it shortlisted three. The lender had initially planned to merge IHFL with itself but later reversed track and decided to sell the unit.

Bank officials said this was mainly owing to potential integration issues that might arise in the event of a merger, primarily on the human resources side.