25 p.c. drop in IDBI's net profit

By Our Special Correspondent

MUMBAI, APRIL 28. The Industrial Development Bank of India (IDBI) has reported a 25 per cent drop in its net profit for the year ended March 31, 2000, at Rs. 947 crores against Rs. 1,259 crores in the previous year. The directors have decided to maintain the dividend at 45 per cent.

Addressing a press conference here today, Mr. G. P. Gupta, Chairman and Managing Director, IDBI, said the sharp drop in profit was mainly on account of higher provisions for bad and doubtful loans which have increased to Rs. 774 crores in 1999- 2000 from Rs. 311 crores in the previous year. Net non-performing assets (NPAs) stood at 13.5 per cent (12 per cent). In absolute terms, these were Rs. 7,700 crores (Rs. 6,500 crores), while gross NPAs soared by Rs. 1,700 crores to Rs. 9,700 crores.

Textiles and steel accounted for the largest share of the bad loans. Mr. Gupta said the institution would focus on aggressive recovery of NPAs during the current year. According to him, the institution had entered into 280 one-time settlements and expected to recover about Rs. 860 crores in a year.

For the year ended March 31, 2000, IDBI's income from operations rose to Rs. 7,619 crores from Rs. 7,291 crores in the previous year. Interest expenses shot up to Rs. 6,370 crores from Rs. 5,725 crores. Sanctions were higher at Rs. 28,308 crores (Rs. 23,745 crores) while disbursements moved up to Rs. 17,059 crores (Rs. 14,470 crores). The interest rate spread has declined to 1.90 per cent from 2.60 per cent.

Mr. Gupta said the institution would be prepaying about Rs. 4,500 crores of domestic high cost debt and 40 billion yen of foreign currency loan during 2000-2001. This will help IDBI to save about Rs. 200 crores in interest cost. IDBI's average cost of funds is also likely to come down to 12.50 per cent in 2000-2001 from 13.1 per cent in the previous year. He said the institution was looking at sanctions of Rs. 30,000 crores, disbursements of Rs. 20,000 crores and profit of about Rs. 1,250 crores in 2000-01.

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