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IDBI Bank Ltd.

BSE: 500116 Sector: Financials
NSE: IDBI ISIN Code: INE008A01015
BSE 00:00 | 06 Dec 45.60 -1.10
(-2.36%)
OPEN

46.85

HIGH

47.25

LOW

45.35

NSE 00:00 | 06 Dec 45.55 -1.15
(-2.46%)
OPEN

46.70

HIGH

47.20

LOW

45.25

OPEN 46.85
PREVIOUS CLOSE 46.70
VOLUME 810432
52-Week high 65.25
52-Week low 26.35
P/E 23.75
Mkt Cap.(Rs cr) 49,031
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 46.85
CLOSE 46.70
VOLUME 810432
52-Week high 65.25
52-Week low 26.35
P/E 23.75
Mkt Cap.(Rs cr) 49,031
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IDBI Bank Ltd. (IDBI) - Chairman Speech

Company chairman speech

Dear Shareholders

As I write this message to you the world is being buffeted by an unprecedented forcein the form of a pandemic. The COVID-19 pandemic which broke out in India in March 2020has seen a resurgence leading to the ‘second wave'. Due to the rising cases ofinfection various states have put in place localised restrictions to control the spreadand save lives. Never have I ever seen such life-changing impact sweeping across everysegment of society and every economic activity. Following the _rst COVID-19 wave andinitial nation- wide lockdown the Government of India (GoI) and the Reserve Bank of India(RBI) took proactive measures with a view to support economic activities as well as tomitigate the worst excesses of the pandemic on the vulnerable segments of the population.Apart from a phased roll-back of restrictions to allow resumption of economic activitiesthe Government of India (GoI) announced a comprehensive economic package viz.AatmaNirbhar Bharat that envisaged _nancial support to critical segments of the economy.Complementing the efforts of the GoI the RBI adopted conventional and unconventionalmeasures such as reduced policy rates sustained forward guidance in the form of anaccommodative monetary policy stance ample liquidity support through Open MarketOperations (OMOs) and special re_nance facilities for select targeted segments as well asregulatory forbearance involving relaxation in norms for restructuring assets andmoratorium to borrowers to support economic activity in the country. While taking stepsfor cushioning the economy against the impact of pandemic-induced restrictions the GoIalso took a proactive public participative approach and developed a COVID-speci_c healthinfrastructure besides training its resources to _ght the COVID-19 pandemic. The GoIconducted intensive testing mandated quarantine set up dedicated COVID-19 treatmentcentres stipulated the COVID-19 related diagnosis & treatment charges to ensureaffordability as also directed provision of free treatment for the economically weakersections of society among other measures. In order to sustainably execute the world'slargest vaccination drive the GoI has adopted a National COVID-19 Vaccination Strategy.In a bid to further augment the healthcare infrastructure the RBI too announced a specialon-tap liquidity window for banks to lend support to entities like hospitals diagnosticspharmacies pharmaceutical companies or importers medical oxygen manufacturers andsuppliers and other operators involved in the critical healthcare supply chain. Despitebeing predominantly a health concern the way the pandemic has rapidly upended livesacross the globe it has had wide-ranging impact on all sectors including banking.

The pandemic has served to accelerate the pace of change in the banking spaceespecially on the digital front. Traditional banking models have been reoriented toincorporate digital initiatives in order to accommodate the ‘new normal' whichdictates social distancing and prohibits unnecessary movement. I _rmly believe that theway ahead for banking will give rise to new technological paradigms in keeping with thenew realities.

The pandemic has made digital transformation more relevant and urgent than before.Opportunities that banks expected to have years to prepare for are quickly approaching andpreviously slow-growing pain points are being pushed to the surface. To meet thesechallenges banks have been compelled to innovate reinvent and rede_ne themselves. Whenthe COVID-19 pandemic forced banks to shut down much of their face-to-face interactionswith customers and step up virtual operations consumers quickly adapted to digitalapplications such as mobile banking and customer support through arti_cial intelligence(AI). Apart from digitisation of back-end processes a number of banks turned to digitalaccount opening and increased use of Application Programming Interfaces (APIs) to growtheir business as well as to cater to the day-to-day requirements of the customers. Banksincreasingly focused on technology innovations relating to voice as a channel AI-poweredchatbots augmented reality social virtual reality hyper-personalisation gami_cationsecure video interactions digital ecosystem plays and others. These developments haveshaken up some long-held beliefs about the primacy of the branch.

Branches have traditionally been the cornerstone of banking evolution over manydecades. However the emergence of digital channels and changing consumer preferences overthe last few years has impacted the importance of a branch in a bank's channel mix. In thepost-pandemic world banks too are encouraging their customers to use low-contact mediumssuch as digital banking channels. In this COVID-19 world when movement is so restrictedfor so many there is no doubt that remote banking will be seeing huge levels of growth.Those who had already adopted it are carrying on with it while those who are new to it arelearning how to do it. In any case most people do not want to go to a branch even if theycan as it means coming into proximity with others. With the pandemic not retractinganytime soon it is a reasonable expectation that some customer preferences will beirrevocably changed especially when it pertains to activities like banking which may seea more or less permanent change as customers carry on embracing the digital methods theyhave been adopting to a greater extent during the crisis.

However in India a signi_cant chunk of customer base relies on the physical channelssuch as branches and ATMs for catering to their banking needs. They continue to remainimportant to sections of society such as older customers who may not be online ruralcommunities and also casual workers and the ‘unbanked' who still need a physicalplace to come in order to encash cheques or make payments. Thus even during thelockdowns banks were providing select services through their branches to cater to thesesegments.

The interplay of rising digitalisation and continued reliance on branch for selectservices has given rise to the concept of ‘phygital' which sees a combinationof digital and physical as a banking strategy for the new isolation economy. Brancheswill continue to be a critical part of a bank's touchpoints but the role shape and sizeof interactions will see a signi_cant change. Banks will be compelled to rethink thetraditional branch model and focus on how to deliver speci_c high value physicalinteractions and experiences that can complement a digital banking core. At the same timebanks must leverage digital technologies to augment physical experiences and make servicesfaster more secure and more convenient. In the new normal customers are likely tocarefully pick and choose how to spend their time interacting especially when it comes tosomething like_a bank branch which may be low-priority destination_for many. Complementingthe traditional brick-&-mortar branches banks may explore models like ‘branch-on-wheels'concept that can take the banking facilities to the neighborhood of customers or bankingkiosks that are co-located within other businesses or physical destinations. While thebranch network will continue to be very important for incumbent banks there is a need tofocus on innovation to increase its relevance and in creating a uni_ed omni-channelcustomer experience. The focus on convenience for everyday banking is prompting a shift todigital modes. But it is critical to provide customers a consistent cross channel journeywhen they choose to shift from digital channels to physical branches.

Another factor which is causing a shift in role of branches is the rising demand forwealth management and advisory services on account of economic hardship faced byconsumers businesses and communities across the globe in the post-pandemic period.Branches of the future will play an integral role in creating trust providing high valueadvice and explaining complex products. Higher degree of digitalisation can reinforceinterconnections between products and services and make a difference for consumers bygiving them more choice and transparency and by helping them to make better-informeddecisions. Admittedly none of these elements are entirely new but they re_ectaccelerations of existing trends punctuated with some additional factors prompted byunexpected shifts in the operating environment.

Despite these challenging circumstances your Bank navigated the uncharted territorywith commendable foresight and nimbleness. In these last two years that is since the timeI have joined as Chairman your Bank did swim through this disruptive whirlwind ofchallenges and emerged triumphantly with some impressive results. The concerted stepstaken by the Bank to strengthen its balance sheet and the focus on generating sustainableand stable growth in business over the years re_ected in its performance in FY 2020-21.The Bank was back in the black for the _rst time after _ve consecutive _nancial years ofloss with a Net Pro_t of Rs.1359 crore in FY_2020-21. The Bank has continued to witnessan increasing skew in favour of retail book both on the asset side and the liabilityside. The capital position of the Bank remained comfortably above the regulatorilyrequired levels. A focussed approach has helped your Bank in improving its recovery andupgradation thereby seeing an improvement in its asset quality ratios viz. GrossNon-Performing Assets (GNPAs) ratio and Net Non-Performing Assets (NNPA) ratio. Theimprovement in the Bank's _nancial health and its commitment to the RBI to comply withcertain regulatorily required parameters saw the RBI lifting the restrictions imposed onthe Bank under the Prompt Corrective Action (PCA) framework with effect from March 102021. This was indeed a momentous achievement for the Bank as it underscores not just thevision of its leadership and management teams but also the hard work and dedication of theentire ground level workforce who toiled to make this dream come true.

R1359 crore

Net Profit in FY 2020-21

The contours of your Bank's strategy will continue to be shaped by the emerging trendsin its sphere of operations. The idea that the achievement of one goal should be thestarting point of another is central to your Bank's business philosophy. In keeping withthis Annual Report's theme of "Towards a Better Tomorrow" your Bankthrough its offerings and initiatives will continue to partner its customers in achievingtheir life goals. By moving towards greater digitalisation of both its internal processesas well as customer interfacing applications your Bank will strive in its efforts toensure expeditious and seamless delivery of its services. The power of one if fearlessand focused is formidable but the power of many working together is unassailable. YourBank's team has seen its efforts yielding positive results and this has served tostrengthen its resolve purpose and direction along with a deeper appreciation for thepower of community and the interconnectivity of knowledge skills and hardwork. Your Bankhas crossed many signi_cant milestones in the recent past but rather than resting on itslaurels the Bank is committed to soldiering on in order to conquer new horizons. As yourBank forges ahead on its journey of being the most trusted and preferred bank I wouldlike to thank the Bank's customers for placing their trust in it. I would also like tothank you and solicit your continued support towards the Bank's endeavours which hashelped it in coming so far in its journey. I would also like to thank all colleagues onthe Board of Directors for their valuable guidance which helped your Bank in successfullytriumphing over challenges and grabbing the emerging opportunities in the constantlyevolving operating environment. Last but not the least I would like to thank theemployees of your Bank for their untiring efforts and dedication even in such tumultuoustimes. All of the Bank's stakeholders in their own capacity are contributors to thelarger design of a better tomorrow. Going forward it is inevitable that the year aheadwill be peppered with challenges stemming from wavering con_dence among businesses as wellas consumers as also sputtering momentum of economic activities. A health emergency ofthis magnitude has demanded extraordinary responses and outcomes from all the affectedpopulation businesses as well as policymakers. Under these circumstances the Bankremains committed to being with its customers and ensuring seamless delivery of _nancialservices and will participate in the relief measures to mitigate the impact of the crisis.Your Bank is cognisant of the elevated risks in the operating environment and will takesteps to remain strong and resilient and be well-positioned to absorb potential lossesthat could arise. Your Bank's commitment to create value for all its stakeholderscontinues to remain strong even in these challenging times. I am sure that together weare going to move towards a better tomorrow.

With best wishes

M. R. Kumar

Chairman

.