IDBI defers plan to open 100 branches

Industrial Development Bank of India (IDBI) has kept in abeyance the opening of 100 new branches, which were planned after it converted into a banking company.

The blueprint for branch expansion will now be drawn up after the completion of the merger of IDBI Bank with IDBI.

"We had even identified properties across India for the planned branch expansion, but then decided to do it along with IDBI Bank. We didn't want to duplicate efforts," said IDBI executive director Jitender Balakrishnan.

Though IDBI has stopped acquiring the identified properties, it might buy some of these sites after a strategy team, comprising representatives from IDBI Bank and IDBI, finalises the branch expansion plan.

IDBI Bank, which is on a branch expansion spree, has increased its branches by 30 to 120 in the current year. It will open another 10 branches in the next two months. IDBI, in its previous incarnation as a development finance institution, had 101 offices across India. This will also get converted into branches.

IDBI has also set up an information technology strategy team for integration of operations of IDBI and IDBI Bank.

IDBI would be using the Finnacle core banking solution, which is currently in use at IDBI Bank. The institution had appointed Hewlett Packard (HP) in June 2004 as its end-to-end solution provider with the mandate to assist it in setting up data centres, disaster recovery sites and data migration-related activities.

HP has completed the initial diagnostic study of various operations of IDBI. The physical infrastructure created for commercial bank branches at Mumbai, Pune, Bangalore, Ahmedabad, Bhubaneshwar, New Delhi and Chennai have been made operational.

These branches have started accepting IDBI's "Suvidha" fixed deposits, using the Finnacle software in a networked environment. The network is proposed to be expanded to all the IDBI offices throughout the country.

IDBI plans to retain the IDBI Bank as a separate strategic business unit after the merger. It expects that the due diligence process for determining the merger ratio will be over by the end of this month.

IDBI's voluntary retirement scheme, which it offered to its employees in November 2004, saw its workforce reduce by 15 per cent to around 2,390.

To meet its planned growth, IDBI recently recruited 25 chartered accountants. IDBI Bank is also adding to its around 1,400-strong workforce.

IDBI had banned recruitment to fill posts that have fallen vacant as a result of the employee separation scheme. It, however, has the freedom to recruit in specialised and newer areas of operations.