Mumbai, Aug. 22: The Industrial Development Bank of India (IDBI), in its new avatar as a bank, will seek leniency from the Reserve Bank of India (RBI) regarding its stake holding in subsidiaries and priority-sector lending.
Chairman and managing director P. P. Vora said this at the institution’s annual general meeting today. Outlining the details of IDBI’s move towards commercial banking, Vora divulged that a sustainable business model for IDBI should provide it access to low-cost retail funds like that of commercial banks.
“The corporate vision of your bank is to move towards a viable commercial banking model,” he said, adding that this would enable the bank to offer total financial solutions to corporate clients.
“Your bank would strive to be a major player in infrastructure finance, besides retaining its leadership in industrial finance. We would explore new markets and industries, including services, offer new products and services, access new sources of finance and would generate new solutions for the corporate sector,” he added.
The IDBI chief clarified that both IDBI, in its new role, and IDBI Bank would be different entities though synergies between the duo will be exploited.
IDBI would concentrate on project finance and retail liabilities (raising low-cost savings accounts to bring down borrowing costs), while the bank will be more focussed towards retail business.
Vora said that IDBI would have to adhere to RBI regulations with regard to holdings in subsidiaries and priority-sector norms. Though he did not anticipate any major problems with regard to priority-sector lending, Vora indicated that IDBI would approach the central bank for more leniency.
He added that the bank would also consider entering into mutually beneficial alliances with financial players, both domestic and international.
“In these relationships, we would share resources, markets, technology and skills to enhance shareholder value on both the sides. Our diversification forays will be designed to build around and add synergy to our core competence in project finance,” he said.
According to him, the restructuring would enable it to offer total financial solutions to corporate clients. The idea is to be a major player in infrastructure finance, besides retaining leadership in industrial finance.