Idbi, then and now

GROUP NO. 1C Ankita Jain Akansha Misra Disha Mahajan Indranil Bhowmick Jyoti Jain

Industrial Development Bank of India (IDBI)
Genesis
1964 - Established as a wholly owned subsidiary of the Reserve Bank of India (RBI)
Established as a DFI with the following functions:
Plays the role of coordinator at all India level.
Providing financial assistance for the establishment of new projects as well as for expansion, diversification, modernisation and technology upgradation of existing industrial enterprises.
undertakes wide-ranging promotional activities including entrepreneurship development programmes for new entrepreneurs, provision of consultancy services for small and medium enterprises, upgradation of technology and programmes for economic upliftment of the underprivileged.

Assistance to backward areas by setting up of voluntary agencies, support to Science and Technology Entrepreneurs’ Parks, Energy Conservation, Common Quality Testing Centres for small industries, SIDBI etc..
TCOs offer diversified services to small and medium enterprises in the selection, formulation and appraisal of projects, their implementation and review.
IDBI played a prime role in setting up of the Entrepreneurship Development Institute of India for fostering entrepreneurship in the country.
Pioneered capital market development
By setting up National Stock Exchange – an electronic Stock Exchange, NSDL – a Securities Depository, CARE – a Rating Agency, SHCIL – a Depository, etc.

Products and services
Project finance, equipment finance, asset credit, equipment lease etc.
Professional advice and services for issue management, project evaluation, corporate restructuring, share valuation etc.
Set up subsidiaries:
IDBI Bank
IDBI Capital Market Services Ltd.
IDBI Investment Management Company Ltd.
1976 - 100% ownership transferred to Government of India (GoI)
1995 - Domestic IPO reduced GoI stake to 52.3%.
2003 – Acquired Tata Finance Ltd. and entered into retail finance sector.
2004 – converted into a banking company

PROBLEMS FACED BY IDBI AFTER LIBERALIZATION

Net profit dropped.
Decline in sanction and disbursements.
Lack of proper leadership.
Break-up of deal between DPC(Dhabol power corporation) & Maharashtra govt.
IDBI’s NPA increased rapidly.
Improper business practices.
ICRA downgraded IDBI’s rating in 2001.
Failed to retain it’s top-rated customers.
IDBI was not triple-A-rated entity.
High cost of funds.
Investors confidence in IDBI has come down drastically.

IDBI’s Financial Performance Over The Year (In Rs. Crore) Particulars 2002-2003 2001-2002 2000-2001 1999-2000 1998-1999 Sanctions 2889 13505 23178 22060 18939 Disbursement 3924 11151 17747 17063 14473 Income 6371 7175 7834 7859 7464 PBT 455 414 734 1027 1300 PAT 401 424 691 947 1258 EPS(in Rs. Crore) 6.15 6.49 10.2 14.07 18.7 Gross NPA 16006 14449 9849 8236 - Net NPA 7308 6500 7675 6488 - Net NPA(in % ) 14.16 11.69 13.44 12.05 -

WAYS OF REVIVAL
Reverse merger with its banking subsidiary ‘IDBI Bank’
Splitting IDBI into a “good –asset IDBI” and an “NPA IDBI”
Hive off its stake in IDBI bank of worth Rs 1,500 crore.

Better option is to go for merger with IDBI bank

Contribution of Merger
To meet out with emerging challenges and reforms in financial sector, it reshape its role from a development finance institution to a commercial institution.
This merger provides an array of customer-friendly services to its existing and prospective clients.
It create a firm foundation for IDBI Ltd. to compete with other banks, supported by strong operational synergies.
“ The government will hold 51.3% stake in the merged entity,”

Shareholding Pattern : Dec 31, 2008

IDBI Bank Business Chart
.

Merger issue
The swap ratio -100:142 (100 shares of IDBI for 142 shares of IDBI Bank).
EGM - February 23 for seeking the approval passed by two-thirds of its shareholders.
Merged entity which will have
assets - Rs 78,000 crore
manpower - over 4,000
By adding IDBI Bank’s network to its own. it have
199 or 200 branches
300-odd ATM
Rs 56,000 crore customer asset portfolio

No. of Branches Metro Urban Semi Urban Rural 178 173 99 53

IDBI Ltd is now virtually a universal bank.
total business size of around Rs.1,34,189 crore,
It uses information technology (IT) platform to structure and deliver personalized banking services and customized financial solutions to its clients.
Pole position in the technological arena
-> Card-to-Card Money Transfer
-> Online tax payment
-> Visa Off-us mobile recharge facility
-> Air Ticketing through ATM etc.
Benefit

Core income growth

Gateway to low-cost deposits.
Positive impact on the Bank’s overall cost of funds and facilitate lending at more competitive rates to its clients.
Highest standards - corporate governance (operations)
IDBI would continue
-> Products and services as part of its development finance role.
-> An array of wholesale and retail banking products, for specific cash flow requirements of corporate and individuals.

The provision coverage to the tune of 97% of gross NPAs is by far the highest in the sector.

Strong Investment Portfolio

Subsidiaries

Network & delivery channels (Current Scenario)
504 branches, 496 counters
871 ATMs
Presence in 316 important commercial centres in India
Presence in 100 cities
Internet banking
Retail customer base: 5 million +
Corporate customers: 3000 +

Achievements
Awards Won during the year
IT Team of the Year(2007) Award of IBA5
Best IT Security Practices Award of NASSCOM
Best CTO Award of Cyber Media
Won two special awards, for “Best Payments Initiative” and “Outstanding Achiever of the Year" (2007)
Key Projects
Airline ticketing through ATMs
Setup of Data Center and Disaster Recovery Center
Internet Banking Enabled Multi-Functional KIOSK
Kolkata and Haldia Port Trust Internet Banking Payment and MIS Modules
Online Payment of Central Excise & Service Tax

New Business Initiatives
IDBI completed the reorganization of its business into separate verticals focused on SME, Agri-business, Personal Banking, Mid Corporate, Large Corporate and Infrastructure.
IDBI Fortis Life Insurance
IDBI Gilts
Bank will also open branches in Singapore, Dubai and Shanghai, with either the Dubai or Singapore branch opening likely by the end of March
Steps initiated for mortgage guarantee business
Took another initiative in reaching out to the smaller clients by introducing facility of Online application for educational loan.
Bank introduced a new product for encashment/sale of Foreign Currency by NRI Clients and encashment of Travelers Cheques by Bank’s existing NRI customers.

Business Strategy
Optimize mix of corporate and retail banking
Increase product offering by leveraging corporate relationships
Rationalize and reorient human resources through on-going training
Improve technology infrastructure
Enhance & implement enterprise-wide risk management systems
Focus on fee based income to boost profitability
Strengthen brand equity
Enhance market share

Pursue organic growth opportunities
Leverage core competency in project financing while creating additional business opportunities in retail & commercial banking
Inorganic growth domestically through bank acquisitions/ mergers
Entry into Insurance, Asset Management
Business operated as separate Retail Banking and Corporate Financing SBU(strategic business units)s
A common Treasury, Risk Management, Audit, IT and other support operations
Integrated and Rationalized branch network

Idbi, then and now

by indsumo on Feb 27, 2009

Accessibility

Categories

Upload Details

Usage Rights

1 Embed 7

Statistics

Idbi, then and now Presentation Transcript