IDBI Bank has crafted a
comprehensive turnaround strategy, with a focus on augmenting the capital base
and recovery from NPAs. Its prime focus includes restricting
corporate loan book growth, raising additional capital and non-core asset sales
to reduce operational costs.
Aggressive recovery and prevention of further slippages is a priority area for IDBI Bank. Given the stress in the corporate sector, the bank will restrict growth in the corporate loan book and focus on increasing retail and priority sector asset base. This will help the bank to reduce risk weighted assets and improve CAR in the short term.
The bank is also planning to raise additional capital in the medium term. It has received a capital infusion of Rs 1900 crore through the Government of India’s subscription to its preferential share allotment earlier this year, which enhanced its Common Equity Tier 1 Capital. Furthermore, Life Insurance Corporation of India has also subscribed to the bank’s preferential equity issue. Additionally, CAR would be improved through sale of non-core assets, continued GoI support and churning of corporate loan book to reduce risk weight of the portfolio.
The bank will look at reducing its operational cost and sell non-core assets over a period of time. The exact schedule and quantum of such a sale will depend on market conditions and the Bank has already initiated the process.
“We are looking at all avenues to improve our capital position and bring the bank on the recovery track. We will look at aggressive recovery and cost cutting measures and plan on churning our corporate book and risk weighted assets which should also ease the pressure on capital. The Government of India, our Principal shareholder, continues to support the Bank,” said V. Narayanamurthy, Field Chief General Manager, IDBI Bank (Bengaluru Zone).
Aggressive recovery and prevention of further slippages is a priority area for IDBI Bank. Given the stress in the corporate sector, the bank will restrict growth in the corporate loan book and focus on increasing retail and priority sector asset base. This will help the bank to reduce risk weighted assets and improve CAR in the short term.
The bank is also planning to raise additional capital in the medium term. It has received a capital infusion of Rs 1900 crore through the Government of India’s subscription to its preferential share allotment earlier this year, which enhanced its Common Equity Tier 1 Capital. Furthermore, Life Insurance Corporation of India has also subscribed to the bank’s preferential equity issue. Additionally, CAR would be improved through sale of non-core assets, continued GoI support and churning of corporate loan book to reduce risk weight of the portfolio.
The bank will look at reducing its operational cost and sell non-core assets over a period of time. The exact schedule and quantum of such a sale will depend on market conditions and the Bank has already initiated the process.
“We are looking at all avenues to improve our capital position and bring the bank on the recovery track. We will look at aggressive recovery and cost cutting measures and plan on churning our corporate book and risk weighted assets which should also ease the pressure on capital. The Government of India, our Principal shareholder, continues to support the Bank,” said V. Narayanamurthy, Field Chief General Manager, IDBI Bank (Bengaluru Zone).
Besides, the bank will
reduce its exposure to corporate sector and instead focus aggressively on retail
lending, adds Narayanamurthy.
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