Four consultants to make presentation to IDBI today

Four consultants "" McKinsey & Co, IBM, PricewaterhouseCoopers and Tata Consultancy Services "" will make presentations to Industrial Development Bank of India board tomorrow on its conversion into a bank.

UTI Asset Management Company chairman and managing director M Damodaran, who will be the CMD of IDBI and hold concurrent charge from October 1 as part of an interim arrangement, is expected to attend the board meeting as a special invitee.

The current IDBI CMD PP Vora's tenure comes to an end tomorrow.

Vora refused to comment on the presentation but said the work on converting IDBI into a bank is on.

During his two year tenure (Vora took over on September 4, 2001), Vora has been able to bring down the cost funds for the institution substantially by refinancing high cost liabilities with low cost ones.

He also increased the provisioning coverage of IDBI from 36.70 per cent in March 2001 and 58 per cent in June 2003.

However, the asset base of the institution has been shrinking even though erosion in profitability has been arrested.

In the first quarter of fiscal 2004, the profit before tax of IDBI stood at Rs 71 crore, up from Rs 33 crore in the corresponding period of the last year.

"We have restructured many assets through the corporate debt restructuring (CDR) mechanism. Haldia Petro has been recently referred to the CDR and we expect this to be recast by October end. Broadly we will follow the recast model of steel companies," Vora told Business Standard.

He also said as a bank IDBI will not be a retail player. On being asked whether IDBI Bank will be merged with IDBI, Vora said: "As of now the two entities will run complementing each other."

One of the four consultants who will make presentations at tomorrow's board meeting at will help IDBI in evolving and implementing a strategy for universal banking, positioning, branding and risk management.

At the first stage nine consultants had made presentations to the executive committee. "There has been a change of scope for the consultants as instead of a full fledged commercial bank, the new avatar will concentrate more on development finances and corporate banking (term loans)," IDBI officials said.

The board had in its previous meeting also discussed hiring of professionals from other private banks after floating a voluntary retirement scheme.

IDBI is looking at opening 100-150 branches in the next two years. The institution has 36 branches which will be reconverted into bank branches.