Indusind Eyes Foreign Banks & #39; Asset Portfolio

IndusInd Bank, the Mumbai-based private sector bank, today said that it had initiated talks with few foreign banks operating in India to take a portion of their asset portfolio.

Fali F Forbes, executive vice-president of the bank, said, "Because of central bank's decision not to treat external commercial borrowings (ECB) to corporates as part of tier - I capital and also the direction to reduce exposure levels to individual corporates, foreign banks operating in niche areas are willing to sell-off their asset portfolio."

However, he refused to divulge further details. He revealed that they had acquired some 'wholesale' corporate account from domestic banks who had sold owing to the capital adequacy ratio (CAR) problem facing them. "These assets are of high quality, and those banks were not able to hold on to these assets because of higher CAR requirement," he added.

 

The bank, for the period ended March 2001, has a paid-up capital of Rs 159 crore and reserves & surplus of Rs 554.43 crore and it was able to maintain a CAR of 15 per cent. Advances during the last fiscal ended March 2001 went up to Rs 4,236 crore as against Rs 3,677 crore in the fiscal ended March 2000.

To a query as to whether promoters are planning to dilute their stake to the Reserve Bank of India (RBI) prescribed level, he said, "RBI has extended their deadline to March 2002 for reducing the promoter stake to 40 per cent. As the market conditions are not favourable for public offer or rights issue, the promoters are weighing their options."

Out of the promoters' holding of 56.25 per cent, IndusInd Enterprises & Finance Ltd hold 31.25 per cent, IndusInd International Holdings Ltd have 10.9 per cent stake and IndusInd and De Five (Mauritius) Holdings Ltd hold 4.38 per cent.

Forbes also did not rule out the possibility of a foreign bank with specialised expertise in picking up strategic stake in the bank. "Though we had not initiated dialogue in this regard, promoters are exploring the possibility of diluting their stake to the extent required to any strategic partner," he added.

Outlining the future expansion plans, Forbes said they were aiming to reduce the average cost of funds by 50 to 75 basis points every year for the next three years, adding that the reduction would come mainly through increased retail mix in the overall business. At present, the average cost of funds is 9 per cent with retail business contributing 20 per cent of total deposits.