Industrial Development Bank of India (IDBI)The Industrial Development Bank of India (IDBI) was established on 1 July 1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. In 16 February 1976, the ownership of IDBI was transferred to the Government of India and it was made the principal financial institution for coordinating the activities of institutions engaged in financing, promoting and developing industry in the country. Although Government shareholding in the Bank came down below 100% following IDBI’s public issue in July 1995, the former continues to be the major shareholder (current shareholding: 65.14%). IDBI provides financial assistance, both in rupee and foreign currencies, for green-field projects as also for expansion, modernisation and diversification purposes. In the wake of financial sector reforms unveiled by the government since 1992, IDBI also provides indirect financial assistance by way of refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment terms.IDBI has played a pioneering role, particularly in the pre-reform era (1964–91),in catalyzing broad based industrial development in the country in keeping with its Government-ordained ‘development banking’ charter.Narasimam committee recommends that IDBI should give up its direct financing functions and concentrate only in promotional and refinancing role. But this recommendation was rejected by the government. Later RBI constituted a committee under the chairmanship of S.H.Khan to examine the concept of development financing in the changed global challenges. This committee is the first to recommend the concept of universal banking. The committee wanted the development financial institution to diversify its activity. It recommended to harmonise the role of development financing and banking activities by getting away from the conventional distinction between commercial banking and developmental banking.In September 2003, IDBI diversified its business domain further by acquiring the entire shareholding of Tata Finance Limited in Tata Home finance Ltd., signaling IDBI’s foray into the retail finance sector. The fully owned housing finance subsidiary has since been renamed ‘IDBI Home finance Limited’. In view of the signal changes in the operating environment, following initiation of reforms since the early nineties, Government of India has decided to transform IDBI into a commercial bank without eschewing its secular development finance obligations. The migration to the new business model of commercial banking, with its gateway to low-cost current, savings bank deposits, would help overcome most of the limitations of the current business model of development finance while simultaneously enabling it to diversify its client/ asset base. Towards this end, the IDB (Transfer of Undertaking and Repeal) Act 2003 was passed by Parliament in December 2003. The Act provides for repeal of IDBI Act, corporatisation of IDBI (with majority Government holding; current share: 58.47%) and transformation into a commercial bank. The provisions of the Act have come into force from 2 July 2004 in terms of a Government Notification to this effect. The Notification facilitated formation, incorporation and registration of Industrial Development Bank of India Ltd. as a company under the Companies Act, 1956 and a deemed Banking Company under the Banking Regulation Act 1949 and helped in obtaining requisite regulatory and statutory clearances, including those from RBI. IDBI would commence banking business in accordance with the provisions of the new Act in addition to the business being transacted under IDBI Act, 1964 from 1 October 2004, the ‘Appointed Date’ notified by the Central Government.IDBI Bank, with which the parent IDBI was merged, was a new generation Bank. The Pvt Bank was the fastest growing banking company in India. The bank was pioneer in adapting to policy of first mover in tier 2 cities. The Bank has one of the highest productivity per employee in Indian banking industry.On 29 July 2004, the Board of Directors of IDBI and IDBI Bank accorded in principle approval to the merger of IDBI Bank with the Industrial Development Bank of India Ltd. to be formed incorporated under the Companies Act, 1956 pursuant to the IDB (Transfer of Undertaking and Repeal) Act, 2003 (53 of 2003), subject to the approval of shareholders and other regulatory and statutory approvals. A mutually gainful proposition with positive implications for all stakeholders and clients, the merger process is expected to be completed during the current financial year ending 31 March 2005.The immediate fall out of the merger of IDBI and IDBI Bank was the exit of employees of IDBI bank. The cultures in the two organizations have taken its toll. The IDBI Bank now is in a growing fold. With its retail banking arm expanding further after the merger of United western Bank.IDBI would continue to provide the extant products and services as part of its development finance role even after its conversion into a banking company. In addition, the new entity would also provide an array of wholesale and retail banking products, designed to suit the specific needs cash flow requirements of corporates and individuals. In particular, IDBI would leverage the strong corporate relationships built up over the years to offer customised and total financial solutions for all corporate business needs, single-window appraisal for term loans and working capital finance, strategic advisory and “hand-holding” support at the implementation phase of projects, among others.IDBI’s transformation into a commercial bank would provide a gateway to low-cost deposits like Current and Savings Bank Deposits. This would have a positive impact on the Bank’s overall cost of funds and facilitate lending at more competitive rates to its clients. The new entity would offer various retail products, leveraging upon its existing relationship with retail investors under its existing Suvidha Flexi-bond schemes.The responsibility for maintaining standards of corporate governance lies with its Board of Directors. Two Committees of the Board viz. the Executive Committee and the Audit Committee are adequately empowered to monitor implementation of good corporate governance practices and making necessary disclosures within the framework of legal provisions and banking conventions.
Genesis 1964-1976 1994- 00 2003 - 06 2007- 10 Set up by an IDBI Act IDBI Repeal Act Complete Act of amended to passed in Networking Parliament in permit private December 2003 (100% Core 1964 as a ownership upto for conversion Banking) subsidiary of 49%. to a banking Organization company. structure the Central Domestic IPO in Bank (RBI) 1995, reduces Govt. ownership redesigned on Govt. stake to to be not below Customer Ownership 51% Segmentation transferred to 72%. Amalgamation basis Govt. in 1976 Post capital of IDBI Bank Ltd. Name changed IDBI had been a restructuring in With IDBI Ltd. to IDBI Bank Ltd policy bank in 2000, Govt. W.e.f. April 2, Achieved the area of stake reduced 2005 regulatory industrial to 58.5% Oct. 2006 norms of SLR, financing and amalgamated CME development erstwhile UWB2
Status as Leading DFI• Leading provider of long term finance o Played an apex role in helping create the industrial and infrastructural base in the country o Total Investments generated - ` 4000 billion (approx.) (over USD 80 bn) o Significant player in domestic debt syndication.• Played a pivotal role in developing institutions that shaped the country’s financial architecture o NSE - Electronic Stock Exchange, o NSDL - Securities Depository, o CARE - Rating Agency, o SHCIL - Depository Participant, e-stamping etc. o SIDBI - Funding institution for SSI and ME o Exim Bank- A bank to finance export Import o ARCIL - Asset reconstruction company o NeDFI - For development of North-East Region3
Distribution Network• Reach • 908 branches; 1496 ATMs • 1- Overseas, 256-Metro, 344-Urban, 212-Semi Urban & 95-Rural • Presence in 613 locations • Network of : o 66 Retail Asset Centres o 31 City SME Centres o 21 Agri Processing Centres o 5 Regional Processing Units o 24 Central Clearing Units • 6 Currency Chests across the country • Internet banking • 4 Regional & 1 Central Training College• Corporate customers:3000+ • Retail customer base:5 million+•Global expansion plans • Initiated the process for setting up Branch Offices at Singapore and Representative Office at Shanghai 4
Restructuring (` in Crore) Industry Outstanding FITL Prov. Net Outstanding Financial Services 6.30 0.00 6.30 Infrastructure 282.05 0.00 282.05 Diamond Industry 95.09 0.00 95.09 Other Services 113.11 0.46 112.66 Electricity 2996.47 170.52 2825.95 Electronics 3.51 0.00 3.51 Agro Industries 180.30 0.46 179.85 IT 27.15 0.00 27.15 Health Care 177.15 0.00 177.15 Metal Industry 629.83 24.01 605.82 Chemical & Fertilizers 169.63 0.00 169.63 Electical Machinery 437.04 17.54 419.50 Motor Vehicles 210.47 0.05 210.42 Paper 133.41 0.00 133.41 Textiles 1447.87 10.00 1437.87 Food & Beverages 818.60 41.45 777.15 Printing 76.70 0.00 76.70 Telecommunications 335.25 0.00 335.25 Real Estate 164.14 0.00 164.14 Misc. Industry 52.30 0.00 52.30 Mining and quarrying 8.70 0.00 8.70 Retail Store 40.17 0.00 40.17 Air Transport 719.29 0.00 719.29 Total 9124.55 264.50 8860.0517
Summary of Restructured Advances as on September 30, 2011 (` in Crore) PA NPA Gross 7589.24 1535.31 Less: FITL Provision 232.35 32.15 Total 7356.89 1503.1618
List of some strategic investments % Holding Entity IDBI ASSET MANAGEMENT LTD. 100.00 IDBI CAPITAL MARKET SERVICES LIMITED 100.00 IDBI INTECH LIMITED 100.00 IDBI MF TRUSTEE COMPANY LTD. 100.00 IDBI FEDERAL LIFE INSURANCE COMPANY LIMITED 48.00 IDBI TRUSTEESHIP SERVICES LIMITED 39.78 NATIONAL SECURITIES DEPOSITORY LIMITED 30.00 BIOTECH CONSORTIUM INDIA LIMITED 27.93 CREDIT ANALYSIS AND RESEARCH LIMITED 25.79 NORTH EASTERN DEVELOPMENT FINANCE CORPORATION LIMITED 25.00 INVESTORS SERVICES OF INDIA LIMITED 24.21 PONDICHERRY INDUSTRIAL PROMOTION DEVELOPMENT AND INVT CORP LTD 21.14 SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA 19.21 ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED 19.18 STOCK HOLDING CORPORATION OF INDIA LIMITED 18.95 OTC EXCHANGE OF INDIA LIMITED 17.00 EDC LIMITED 11.43 TRIPURA INDUSTRIAL DEVELOPMENT CORPORATION LIMITED 10.78 NEPAL DEVELOPMENT BANK LIMITED 10.00 UNIVERSAL COMMODITY EXCHANGE LTD. 10.00 CORDEX INDIA PVT. LTD. 7.14 SECURITIES TRADING CORPORATION OF INDIA LIMITED 6.60 CLEARING CORPORATION OF INDIA LIMITED 6.50 NATIONAL STOCK EXCHANGE OF INDIA LIMITED 5.00 UNITED STOCK EXCHANGE OF INDIA LIMITED 0.9721
IDBI is now the principal financial institutionfor co-ordinating the working of institutionsengaged in financing, promoting or developingindustry, assisting the development of suchinstitutions and providing credit and other facilitiesfor the development of industry. Thus the role ofIDBI may be stated as under:(1) As an apex financial institution, it coordinates theworking of otherfinancial institutions.(2) It assists in the development of other financialinstitutions.(3) It provides credit to large industrial concerns directly.
FunctionsTo grant loans and advances to IFCI, SFCs or any otherfinancialinstitution by way of refinancing of loans granted by suchinstitutions which are repayable within 25 year.To grant loans and advances to scheduled banks or stateco-operativebanks by way of refinancing of loans granted by suchinstitutionswhich are repayable in 15 years.To grant loans and advances to IFCI, SFCs, otherinstitutions,scheduled banks, state co-operative banks by way ofrefinancing ofloans granted by such institution to industrial concernsfor exports.
Contd.To underwrite or to subscribe to shares or debentures ofindustrial concerns.To subscribe to or purchase stock, shares, bonds anddebentures of other financial institutions.To grant line of credit or loans and advances to otherfinancial institutions such as IFCI, SFCs, etc.To grant loans to any industrial concern.To guarantee deferred payment due from any industrialconcern.Role of specialised Financial Institutions :: 65To guarantee loans raised by industrial concerns in the
Contd.To provide consultancy and merchant banking servicesin or outside India.To provide technical, legal, marketing and administrativeassistance to any industrial concern or person forpromotion, management or expansion of any industry.Planning, promoting and developing industries to fill upgaps in the industrial structure in India.To act as trustee for the holders of debentures or othersecurities.
ObjectivesThe main objectives of IDBI is to serve as the apex institutionfor term finance for industry in India. Its objectives include- (1) Co-ordination, regulation and supervision of the working of other financial institutions such as IFCI , ICICI, UTI, LIC, Commercial Banks and SFCs. (2) Supplementing the resources of other financial institutions and thereby widening the scope of their assistance. (3) Planning, promotion and development of key industries and diversifications of industrial growth. (4) Devising and enforcing a system of industrial growth that conforms to national priorities.
SubsidiariesThe following are the subsidiaries of IDBI.(1) Small Industries Development Bank of India(SIDBI)(2) IDBI Bank Ltd.(3) IDBI Capital Market Services Ltd.(4) IDBI Investment Management Company
Small Industries Development Bank of India (Small Industries Development Bank of India is an independent financial institution aimedto aid the growth and development of micro, small and medium-scale enterprises in India.Set up on April 2, 1990 through an act of parliament, it was incorporated initially as awholly owned subsidiary of Industrial Development Bank of India.Current shareholding is widely spread among various state-owned banks, insurancecompanies and financial institutions.Recently it has opened seven branches christened as Micro Finance branches, aimedespecially at dispensing loans up to Rs. 5.00 lakh.SIDBI has also floated several other entities for related activities:Credit Guarantee Fund Trust for Micro and Small Enterprises provides guarantees tobanks for collateral-free loans extended to SME.SIDBI Venture Capital Ltd. is a venture capital company focussed at SME.SME Rating Agency of India Ltd. (SMERA -) provides composite ratings to SME.
IDBI Capital Market Services Ltd.IDBI Capital offers a full suite of products and services to Corporate, Institutional andIndividual clients. The range of services include :- Investment BankingCapital Market ProductsPrivate EquityCorporate Advisory ServicesMergers & AcquisitionsProject Appraisals & Debt SyndicationStock Broking - Institutional & RetailDistribution of Financial ProductsDebt Placement and UnderwritingFund Management (Managing Clients Assets-Pension/PF Fund Managers)Research Group
IDBI Investment Management CompanThe Key strengths of IDBI capital Market Services in the areas of Debt Fund Management are:Fund Management experience of 10 yearsExpertise in both Debt & Equity MarketIDBI Capital is the only Portfolio Manager in the Country to achieve ISO 9001: 2000 Standard forQuality Management Systems in Fund Management operations, with certification from TUV NORD anaccredited German standards firmSubstantial Returns Over BenchmarkIDBI Capital is a SEBI registered Portfolio ManagerMinimum Idle DaysFund management skill covers Portfolio Analysis that includes ALM, Asset Allocation, RiskAnalysis, Maturity Analysis and Yield AnalysisTransparency of OperationsStrict adherence to Compliance ProceduresHighly Rated Debt Research
Balance Sheet (` in Crore) As at 30-Sep-11 30-Sep-10 LIABILITIES Capital 985 984 Reserve & Surplus 14413 12958 [Net Worth] 13493 11997 Deposits 174441 154305 Borrowings 52915 49410 Other Liabilities & provisions 7638 7231 Total 250392 224888 ASSETS Cash & balance with RBI 15040 14380 Bal. with banks & money at call 1481 3604 Investments 69941 69223 Advances 155917 130213 Fixed Assets [incl leased assets] 3058 3049 Other Assets 4955 4419 Total 250392 2248886
Profit & Loss (` in Crore) Particulars Quarter Ended Half Year Ended Sep-11 Sep-10 Sep-11 Sep-10 Interest income 5812 4534 11441 8816 Interest expenses 4690 3409 9167 6847 Net Interest income 1122 1125 2274 1969 Other Income 479 535 910 1008 Total income (Net of Interest Expenses) 1601 1660 3184 2977 Operating Expenses 595 635 1147 1120 - Employee Cost 266 342 510 576 - Other Operating Expenses 329 293 637 544 Operating Profit 1006 1025 2037 1857 Provisions & contingencies 490 596 1186 1177 - NPAs / Write offs 183 319 543 634 - Restructured Assets 15 18 26 49 - Others (Invt., Std Asset, etc) 122 104 177 260 - Tax 170 155 440 234 Profit After Tax 516 429 851 6807