IDBI meet today on bank conversion

The board of the Industrial Development Bank of India (IDBI) is slated to meet today in Delhi to review its plan for conversion into a bank.

This is the first meeting of the board of the institution after the houses of Parliament cleared the Industrial Development Bank of India (Transfer of Undertaking and Repeal) Bill 2002.

IDBI has received a forbearance of five years for the requirement of SLR. It is however ready to meet the obligation of cash reserve ratio (CRR) of around Rs 2,000 crore to the RBI immediately. The SLR requirement for the institution is pegged at around Rs 18,000 crore.

The institution is also likely to take the help of its subsidiary IDBI Bank in setting up new branches. It is also likely to use the same technology as that of IDBI Bank.

IDBI Bank currently uses Infosys' Finnacle. The FI had also earlier looked at options of sending its officials to IDBI Bank to get a hands on experience.

The institution has 36 branches which will be reconverted into bank branches. It was also earlier looking at opening 100-150 branches in two years.

The FI had also earlier shortlisted McKinsey & Co, IBM, PricewaterhouseCoopers and Tata Consultancy Services.

The consultant will help IDBI in evolving and implementing a strategy for universal banking, positioning, branding and risk management.

However, in certain quarters there is a feeling that the consultant help may not be required. The board will also decide on the fate of IDBI Bank- either IDBI sells its stake in the bank or merge it.

N S Sisodia, secretary, financial sector, ministry of finance, had last week said that one of the option for restructuring of IDBI is its merger with a public bank or IDBI Bank.