IDBI Bank eyes stake sales in subsidiaries

MUMBAI: IDBI Bank plans to ramp up growth, regain lost corporate customers and sell stakes in its insurance, capital markets and technology arms following its exit from the banking regulator’s prompt corrective action (PCA) framework for weak lenders.
IDBI Bank MD & CEO Rakesh Sharma told TOI that the bank had used the four-year interregnum to restructure its business, cut exposure to large loans and bulk deposits and create verticals for various lending businesses to speed up turnaround time. As a result, the institution has transformed from a project financier to a retail lender.
“While our retail portfolio grew during the moratorium period, we were not able to cater to the corporates. We are now looking at the mid-corporate segment, particularly the good companies which were our partners earlier and we could not extend loans because of restrictions under the PCA,” said Sharma.

He said that the bank was looking at Rs 4,000 crore of recoveries in the next fiscal year. In addition, it was willing to sell a 25% stake in Ageas Federal Life (formerly IDBI Federal Life) to the foreign partner if they wanted to acquire the stake once the increase in foreign direct investment (FDI) is allowed.
IDBI Fintech is a 100% subsidiary of the bank. The company provides end-to-end IT services to IDBI Bank, its group companies, its ultimate parent company LIC, as well as other external clients in the BFSI sector. The company was currently in the process of appointing merchant bankers to help identify a strategic joint venture partner. IDBI Capital Markets is the merchant banking arm of IDBI Bank and the lender is looking for a strategic partner in this company as well.
The RBI’s PCA places restrictions on weak banks from offering large loans to corporates and offering salary hikes for management and from expanding business. Sharma said that the bank did hire specialists from the market, but now that it was out of PCA it would do more lateral recruitments and continue to hire from campuses.

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