INSUBCONTINENT EXCLUSIVE:
MUMBAI/KOLKATA: Beleaguered IDBI Bank getting ?9,000 crore in equity investment from Life Insurance Corp of India may be a lifeline for the
lender, but to regain its past glory it requires a new vision and strategy from B Sriram who has taken over as its new chief executive.
For
a bank that is stuck with more than a quarter of loans as bad loans and not much of a retail presence, a new strategy on how to ride the
nobody should benefit at the cost of the other
There is no proposal as how LIC will bring the bank out of the rut
There will be constraints
In the past decade, IDBI Bank has received capital from the government to the tune of ?22,884 crore, data from ICRA shows
Even last fiscal it received ?12,471 crore in capital IDBI Bank transformed into a universal lender from having been a term lending
institution specialising in project funding in the pre-liberalisation era when the country faced enormous capital deficiency
higher than any other bank
the bank recovery happens in the next 4-6 quarters, then policyholders will benefit, else the money is going down the drain
Its capital adequacy is at 10.70%
So, there will be fresh thinking which should help IDBI in the long run
stewardship of KV Kamath, the continued government ownership and diktat from New Delhi restricted the activities of IDBI Bank.
But given its
precarious financial position, it would be a tall order for it to cut cheques for thousands of crores for single project and sit pretty
With most banks switching out of project lending, the glory days of IDBI Bank may be behind.
Also, big companies such as Reliance Industries
and Hindalco Industries are shifting their funding profile with them accessing the bond markets more often which give them better pricing
than a bank loan.
So, IDBI Bank faces challenge in its traditional stronghold as well.
