The Industrial Development Bank of India (IDBI) today ruled out the possibility of merging its subsidiary IDBI Bank in order to become a universal bank.
Speaking to Business Standard after the institution's first board meeting as chairman, IDBI chief PP Vora said: "We have taken a firm decision against the merger of IDBI with the IDBI Bank to convert it to a universal bank. IDBI Bank will remain a separate entity."
He added that capital infusion needs to be done for the IDBI Bank. "However there is no urgency for this as its capital adequacy ratio is high. There are many proposals in the pipeline and we will go for capital infusion at an appropriate time," Vora said.
IDBI currently holds 57 per cent of its stake in the bank and another 14 per cent is being held by Sidbi. IDBI has to bring its stake down to 40 per cent in accordance with the Reserve Bank of India's licensing norms for new private banks.
IDBI Bank had appointed DSP Merrill Lynch to manage its proposed preferential issue. Bank of Muscat is among the various suitors for the bank. The bank is looking at all possible options including offloading stakes to private equity partners, bringing in a strategic investor and a preferential issue.
The board meeting did not discuss the road map to universal banking as Boston Consulting Group (BCG) has not submitted its report. BCG is likely to submit its report by the end of October which will give various options to the institution.
