IDBI to rework past loan rates for performer firms

The Industrial Development Bank of India (IDBI) board met in Kolkata today and decided to re-negotiate interest rates on past high-cost rupee loans for existing well-performing companies with a view to bring their rates, in line with current lower interest rates regime.

The board has approved a graded reduction in interest rates on their rupee loans, based on their individual credit ratings.

While the rupee loans to existing clients with a credit rating between "AAA" and "AA+" would stand reduced to a floor rate of 8.50 per cent, the corresponding rates for "AA" to "AA-" category has been pegged at 9.50 per cent, for "A+", "A" and "A-" at 10.25 per cent and "BBB" and below at 11 per cent. The companies would have to pay a 50 per cent premium hitherto.

M Damodaran, chairman IDBI said that the institutions would focus on term lending, project finance and new businesses like retail both on the asset and liabilities side.

He said that IDBI would get into every category of retail lending that every bank was into and fully braced up to cater to retail clientele by virtue of its presence. IDBI has 101 branches out of which 65 were new branches.

Damodaran said, IDBI had also brought down the prime lending rate (PLR) to 10.25 per cent, which was at the same level as State Bank of India (SBI).

He also said that IDBI would be strengthened by hastening its decision making process and introducing a whole range of products.

Commenting on possible merger of IDBI with IDBI Bank he said that was one of the options being considered but no decision had been reached.

Damodaran said, the decision on the issue could precede the conversion of IDBI into a bank but, the implementation would be after the conversion.

He said, a decision would be taken after a consultative process to factor in interests of all possible groups. The institutions, he pointed out, had many shareholders and interest groups.

Meanwhile, IDBI today held its board meeting in the city, after a gap of nine years.

M Damodaran, chairman IDBI said that IDBI had taken a conscious decision to hold every second board meeting outside Mumbai, which would provide them an apposite opportunity to discuss and brainstorm with state government officials, opinion makers, professionals and valued clients. Damodaran said, the board met 15 industrialists yesterday and was invited by chief minister, Buddhadeb Bhattacharya today.

Several issues relating to how IDBI could assist in industrial development in the state were discussed apart from the initiatives taken by the state government to promote investment.

Damodaran said, there were many opportunities and IDBI would play a more active role in the state.