| How difficult is the job at hand? |
| I was with UCO Bank, which was tough. IDBI's unique strength is its project finance expertise and the government ownership ensures a sovereign rating and thus lowers borrowing costs. |
| We have business relationships with 2,500 corporations in the country, and now with the merger of IDBI Bank, we've got a branch network and the products built by the private bank over the past 10 years. Finally, we have a good technology platform. |
| The weaknesses? |
| We have 154 branches and 350 ATMs "" which is still not what we need to have, especially given the balance sheet size of Rs 82,659 crore. Also, the legacy assets have an element of high risk compared with retail lending. |
| About 75 per cent of our lendings is project financing. Even after the merger, funds cost us 7.14 per cent against around 4 per cent for most banks, so our net interest margin (0.47 per cent) is the lowest in the industry. But we've started correcting this. |
| How is the integration of the two strategic business units (SBUs) progressing? |
| Following the merger of IDBI Bank with IDBI Ltd (effective October 1, 2004), departments like information technology, audit and treasury are functioning under a single roof. |
| The merger was aimed at consolidating businesses across the value chain, enabling the merged entity to offer an array of services to clients, both within India and, in due course, abroad. |
| Hewitt Associates (HR consulting firm) will shortly submit its report on revamping the existing HR architecture for empowering and enhancing the human resources potential of our bank. |
| IDBI is a PSU. So will you be able to retain talent in the private sector IDBI Bank? |
| We will have to follow the broad contours of a public sector bank's HR policy as regards recruitment, promotion, remuneration structure and so on. We have clarified to the employees of IDBI Bank that their emoluments and service conditions would be protected up to April 1, 2008. |
| There is no question of adopting a private sector bank's salary structure. The pay scales will have to be revised. The employees of IDBI Bank would need to think whether they would look for better prospects elsewhere. We need to build a second line .... |
| How will you attract good talent? |
| IDBI's salary structure is linked to RBI scales, which is about 10 per cent higher than other public sector banks (PSBs). But the promotion policy is not linked to the RBI. |
| We will recognise merit. With the government gradually conferring more autonomy, it won't be long before even public sector banks are in a position to offer the best pay packages. For the time being, we are planning to tap ready-made talent from other public sector banks. |
| The finance minister wants large PSU banks to consolidate. |
| My plan is to complete the integration within a year's time. Once we achieve this, we will explore the possibility of acquiring a bank in order to increase our footprint. |
| What's your vision for the bank? |
| I want to bring private sector culture in the PSU bank. If I can complete the exercise, it will make a unique combination. It's all about the systems and procedures. |
| IDBI is now a tech-savvy new generation universal bank boasting a balance sheet size of Rs 82,659 crore. We expect our total assets size to cross Rs 90,000 crore by the end of March 2006. |
| IDBI had witnessed a decline in its loan assets. |
| The performance of companies assisted by IDBI is improving. This has led to a lot of pre-payments. Since April 2005, we sanctioned Rs 11,000 crore of loans, out of which Rs 4,500 crore has already been disbursed by the development banking unit and another Rs 1,000 crore by the commercial banking arm (IDBI Bank). Still, the overall growth in loan assets will be just Rs 2,000 to Rs 3,000 crore. |
| The development banking unit had decided to gradually reduce project funding exposure. |
| We don't want to take huge exposures to projects any more. We have a strong team for loan syndication. Project appraisal notes can be sold for a fee to prospective participants in a loan syndication. |
| We will take a token exposure to the project for which we undertake loan syndication. A case in point is the Rs 5,500 crore loan syndicated for Hindalco. We earn huge fees on loan syndication. |
| What is happening to IDBI's legacy NPAs? |
| Rs 9,000 crore of bad assets involving 650 accounts were transferred to the Stressed Assets Stabilisation Fund. We have resolved Rs 3,500 crore of these for realisation. By the end of this year, we expect to have realised Rs 1,500 crore. |
| Has IDBI's plan to enter insurance business moved forward? |
| In the next three months we should be making an announcement. |
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