The Hindu : IDBI in talks to sell IDBI Bank stake

Online edition of India's National Newspaper
Saturday, Jun 01, 2002

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Business

IDBI in talks to sell IDBI Bank stake

MUMBAI MAY 31. Industrial Development Bank of India is in discussion with two foreign investors for diluting at least 20 per cent of its stake in IDBI Bank to either or both of these entities.

"We are in an advanced stage of negotiations with both the foreign investors to bring down our stake from 58 per cent to either 44 per cent or 40 per cent and a clear picture should emerge by January 2003," IDBI chairman and managing director, P. P. Vora, told reporters here today. He said earlier, the FI had set a deadline of September 2002 for completion of divestment of its stake to a strategic partner, which had now been extended.

However, Mr. Vora explicitly ruled out the merger of IDBI with IDBI Bank stating that the move was not on the cards. "It is not a priority and nor are we contemplating". Mr. Vora said in the coming 9-12 months, the FI would convert itself into a universal bank.

"With the repeal of IDBI Act under consideration by the Government, we will be able to convert IDBI into a corporate entity as IDBI and transfer all the assets to the new company," the CMD explained adding details were still being worked out.

Elaborating on the 38.6 per cent drop in the FI's net profit (Rs. 424 crores in 2001-02 against Rs. 691 crores in 2000-01), Mr. Vora said "this year was that of consolidation and cleaning up of the balance sheet".

For the first time in its history, IDBI has written off one of the highest ever provisions of Rs. 3,233 crores in the form of bad and doubtful debts.

Mr. Vora said with the augmentation of Tier I capital, accelerated write-offs have been made to the extent of Rs. 2,500 crores against special reserves to reflect the financial strength of IDBI. "With this, total provisions or write-offs so far would form 54.2 per cent of gross NPAs at Rs. 11,768 crores," he said. "We are aiming for a net NPA below 5 per cent by 2003," he said. The CMD said IDBI had sanctioned Rs. 16,034 crores under all schemes and disbursements stood at Rs. 11,158 crores in 2001-02. Financing infrastructure projects continue to be focus area. — PTI

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