IDBI Bank plans to revive IT arm

We have submitted revival proposals to the government and RBI: V P Shetty.

IDBI Bank expects to revive its information technology arm, IDBI Intech, and position it as a third-party service provider for banks.

On the sidelines of a function to inaugurate a disaster recovery site (DRS) of the bank at Chennai, V P Shetty, chairman and managing director, IDBI Bank, told Business Standard, "Of late, IDBI Intech has not been active. We have submitted revival proposals to the government and Reserve Bank of India (RBI)."

The need for approval arose since Industrial Development Bank of India has been been merged with the IDBI Bank. The prevailing banking regulations do not permit banks to undertake unrelated business activities.

As on June 30, 2004, the authorised capital of IDBI Intech stood at Rs 100 crore consisting of an equity share capital of Rs 75 crore and preference share capital of Rs 25 crore.

The company, which is a wholly owned subsidiary of IDBI, was set up in 2000 to undertake IT-related activities.

Once revived, IDBI Intech will offer technological assistances, such as managing data centre. "Investments, if required, will be made by the bank and as for manpower, we have the required human resources to handle the operations," Shetty said.

The bank has invested about Rs 56 crore to set up the disaster recovery site (DRS), for which it has teamed up with IBM.

The reason for choosing Chennai to set up its DRS is that it already has a data centre in the western coast (at Belapur in Mumbai). Moreover, the bank has a prime property here and skilled labour is also easily available.

The bank has obtained licences from RBI to open 40 branches in rural areas by March 2006. Requests for another 150 to be opened this year are pending with the apex bank.

IDBI has currently 160 branches.

On the insurance venture, Shetty said negotiations with overseas partners are in the final stages and a pact is expected to be signed in one month.

He, however, declined to mention the name of the partner. There were reports that the bank is in talks with global majors such as Fortis, Generali and Dai-Ichi Mutual.