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IDBI Bank prepares roadmap for NPA reduction, improving financial health

Strategies have been drawn to ensure that the NPAs are reduced in a structured manner by taking help of Insolvency and Bankruptcy Code (IBC) and other means

Press Trust of India  |  Mumbai 


State-owned has prepared a comprehensive plan for improving its financial health and reducing in light of RBI's recent communication pointing out various weaknesses in the lender.

The bank has also identified various non-core assets and real estate properties for sale to shore up its capital, sources said.

The bank, which is one of the richest in terms of real estate assets, recently got them valued at market rate and made it part of core capital, sources said, adding that this has strengthened the balance sheet of the lender.

Last month, the bank concluded a deal to sell one of its buildings located in Bandra Kurla Complex (BKC) in the city to the market regulator (Sebi) for about Rs 10 billion.

This was in addition to a strong dose of capital infusion to the tune of Rs 78.81 billion on March 27. This was the remaining portion of capital infusion of Rs 106.10 billion planned by the for for 2017-18, aimed at meeting the minimum Tier 1 capital requirements of

A sum of Rs 27.29 billion was infused last year. Prior the recent series of capital infusion, the government had 77.8 per cent stake in the bank.

RBI, in its communication to the Ministry, had also raised the need for more robust risk assessment and improvement in credit underwriting standard. The bank is in the process of addressing these two concerns, sources said.

It is to be noted that IDBI Bank is under RBI's prompt corrective action (PCA) framework. Gross were pegged at Rs 506.22 billion at the end of December 2017, 24.72 per cent of advances. It reported a net loss of Rs 15.42 billion in the December 2017 quarter.

Strategies have been drawn to ensure that the are reduced in a structured manner by taking help of Insolvency and Bankruptcy Code (IBC) and other means, sources said.

Further, RBI's recent guidelines have also set the strict timeline for recovery of various under the IBC. The central bank has withdrawn the mechanism which included Corporate Debt Restructuring Scheme, Strategic Debt Restructuring Scheme (SDR) and Scheme for Sustainable Structuring of (S4A).

The Joint Lenders' Forum (JLF) as an institutional mechanism for resolution of stressed accounts was also discontinued.

First Published: Sun, April 15 2018. 19:14 IST