Sidbi to buy IDBI stake in 18 state finance corps

In the run-up to its conversion into a commercial bank, IDBI is expected to divest its stake in these corporations. IDBI currently holds anywhere between 20 to 30 per cent stake in these corporations while the balance is held by the respective state governments.

Sidbi has extended finance aggregating Rs 4,100 to these SFCs. Of this assets aggregating Rs 3,600 crore are classified as standard. 

"We have signed memoranda of understanding with seven SFCs "" Andhra Pradesh, Haryana, Kerala, Karnataka, Madhya Pradesh, Rajasthan and West Bengal "" to restructure their liabilities aggregating Rs 2,285 crore and also extend fresh finance," V K Chopra, chairman and managing director, Sidbi said.

Restructuring of these SFCs is subject to the respective state governments extending equity support. Further the corporations have also to ensure that recovery from standard assets is at least 90 per cent, sticky assets arising from fresh disbursals is less than five per cent, and overall the NPAs are not over 10 per cent.

If the SFCs meet these conditions they can enjoy a rebate of two per cent on old as well as fresh borrowings and also take advantage of a one year moratorium on repayment. Sidbi will also help these corporations by imparting training to their personnel and establish risk management procedures.

Meanwhile, Sidbi has moved the Reserve Bank of India to allow it offer working capital loans to its SME clients. This is in addition to its existing main business of extending term loans to these entities. It is also eyeing the fee-based business.

"We will be a bank in the limited sense, offering integrated credit service. Instead of our SME clients having current account/ cash credit accounts with other commercial banks, they can enjoy the convenience of maintaining these accounts with us and transact business under one roof," said Chopra.

Govt defines 'medium' in SME:
The government has for the first time defined the "medium" in SME (small and medium enterprises) segment as any manufacturing unit having net investment in plant and machinery of up to Rs 10 crore. Any unit having net investment of up to Rs one crore in plant and machinery is defined as small scale industry.

Net up 17%

Sidbi has reported a 17 per cent increase in its net profit at Rs 244 crore for the financial year ended March 31, 2004, compared with Rs 208 crore in the previous financial year.

The bank's operational income declined by 18 per cent to Rs 1154 crore (Rs 1,408 crore). Disbursals were down by 35 per cent at Rs 4,417 crore (Rs 6,789 crore).

The bank's net non-performing assets (NPAs) declined to 2.38 per cent (3.84 per cent) and the gross NPAs rose to 8.10 per cent (7.01 per cent).