The Industrial Development of India (IDBI) has decided to enter into life insurance and will finalise a joint venture partner at its next board meeting slated on December 30.
At the press meet to announce the details of its Flexibonds V issue, the chairman and managing director of IDBI, G P Gupta, said, "We are talking to a few insurers and the board is yet to approve the joint venture partner for our insurance foray."
He said that apart from ING, IDBI is also talking to a few other US-based insurance firms for the tie-up.
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"The Centre may not permit a private firm to venture into both general and life at the same time. Hence, to begin with, we would opt for life insurance," he said.
The board of IDBI is also expected to take up the issue related to the steel industry in the forthcoming board meeting.
The status of the steel industry will be presented to the board which would include IDBI's total exposure in this industry, impact of government's recently announced measures to revive steel industry, projects that are nearing completion and the projects that require rescheduling of loans. The board will also review the future prospects of projects that are unlikely to meet financial closure in near future.
Commenting on the status of industries facing recession, Gupta said "industries such as steel, cement and paper have performed better, although marginally, than in the last fiscal."
Meanwhile, the institution announced its plan to enter the retail debt market with its Flexibonds V series to raise Rs 750 crore with a 100 per cent greenshoe option.
Gupta said IDBI has so far raised Rs 5,500 crore from the Flexibonds series and has an investor base of 26 lakh.
"The next series of Flexibonds will hit the market in February," he said. The financial institution is offering four instruments-regular income, growing interest, multi-option and infrastructure bond.
The regular return bonds will offer 14 per cent annualized coupon for seven years and an early encashment facility at the end of five years, in which case the interest works out to 13.75 per cent.
The infrastructure bond will offer 12.5 per cent coupon and investment can be for a period of three or seven years.
The growing interest bond will have a tenure of seven years and returns on the instrument will grow from 11 per cent to 20 per cent during the tenure. In case of the multi-option bonds, there will be an lock-in period for either two or three or four years whereby there would not be any interest payment. The interest payable at the end of two years would be 17.5 per cent per annum, 22.5 per cent from the end of third year and 30 per cent from the end of fourth year.