IDBI ups ante, sets Rs 1000 cr target for bad loan recovery

Industrial Development Bank of India (IDBI) has embarked on a drive to recover as much as possible its bad loans which have been completely written off. IDBI has set its recovery officers a target of redeeming by March 31, 2005 up to Rs 1,000 crore of loans written off, IDBI sources said.

IDBI has listed cases of write-offs for targeting its recovery efforts to ensure its balance sheet is further strengthened when it merges IDBI Bank with itself with effect from March 31, 2005.

IDBI had written off Rs 28,000 crore including interest in these cases. The principal amount sunk in these written-off loans aggregate Rs 4,000 crore.

Sources said the recovery officials will negotiate with defaulters to pay up whatever they can, irrespective of the economic viability of the projects funded.

IDBI's customer assets largely comprise project loans, which have seen a very high level of delinquencies. During the 18 months ended September 2004, IDBI transferred 18 bad loans having an aggregate principal of Rs 382 crore to Asset Reconstruction Company of India Ltd (ARCIL), for Rs 246 crore. It has thus far seized assets of six units under the SARFAESI Act and recovered Rs 116 crore.

IDBI's net bad loans, non-performing assets in banking parlance, declined to 2.4 per cent of the total assets as on September 30, 2004, from 14.2 per cent as on March 31, 2003. Its restructured assets as at March 31, 2003 were very high at Rs 10,347 crore, 22.7 per cent of its loans and advances.

IDBI's asset profile has improved following the sale of its net stressed assets of Rs 9,000 crore to the stressed assets stabilisation fund. It will also benefit from the merger of IDBI

Bank, which has a strong asset quality and good credit management function.