IDBI ramps up branch network

As a precursor to conversion into a bank, Industrial Development Bank of India has increased its branch network from 39 to over 100 by adding over 60 new deposit mobilisation branches across the country.

Asked to comment on this, IDBI's officiating chairman and managing director M Damodaran denied any knowledge of the development.

The new branches would be located in the offices of Stock Holding Corporation and its housing finance subsidiary. IDBI has already deputed branch heads in the new centres, who are now undergoing training.

The branches, IDBI executives said, would be one-man offices which may be upgraded later on. The focus has been on class B cities since the larger cities were already covered by the institution.

The executives added that the move would help it avoid seeking permission from Reserve Bank of India for setting up new branches when it converts into a bank.

Finance Minister Jaswant Singh has set a deadline of April 1 for completing the restructuring of the financial institutions in the country.

The sources indicated that according to a tentative plan worked out by the IDBI management, the bank would be functional from April 2, subject to President clearing the IDBI Repeal Bill that was cleared by Parliament during the winter session that ended in December.

They said that IDBI has also tied up with State Bank of India to train its executives.

The new branches have been given the task of deposit mobilisation which would be confined to fixed deposits and bonds at the moment. The IDBI Act does not allow the institution to mop up deposits with a maturity of less than a year.

According to the action plan worked out by the finance ministry, conversion into a bank is expected to help IDBI significantly reduce its cost of funds by raising short term deposits from its assisted ventures.