Company Overview

IDBI Bank Ltd., (NSE:IDBI) as a full service universal bank, provides a wide gamut of financial products and services encompassing deposits, loans, payment services and investment solutions. The Bank has an established presence in associated financial sector businesses including capital market, investment banking and mutual fund business. The company offer an innovative range of digital services that complement its pan-India network of branches and ATMs. 1

Industrial Development Bank of India – which was an apex Development Financial Institution (DFI) in the realm of industry from July 1, 1964 to September 30, 2004. On October 1, 2004, the erstwhile IDBI was converted into a banking company – IDBI Ltd. - to undertake the entire gamut of banking activities while continuing to play its secular DFI role. Desirous of fuelling its business growth, IDBI Ltd. merged its subsidiaries - the erstwhile IDBI Bank, IDBI Home Finance Ltd., IDBI Gilts, the erstwhile United Western Bank Ltd., with itself over a period of time. IDBI Ltd. also changed its name to IDBI Bank Ltd. to reflect its widened business functions.


 IDBI Bank – Journey so far…
1964Set up as a subsidiary of RBI under an Act of Parliament as the apex financial institution in the area of industrial financing and development
1976Ownership transferred to GOI from RBI. Designated principal FI for coordinating the working of institutions at notional & state levels engaged in financing, promoting & developing industry
1982IDBI transfers its export financing function to EXIM Bank which was established with 100% GOI shareholding under Export Import Bank of India Act 1981
1990SIDBI was set up as a wholly owned subsidiary of IDBI under an Act of Parliament
1994IDBI Act 1964 amended to permit private ownership up to 49%
1994Set up a private sector Bank: “IDBI Bank Limited” for rendering commercial banking services
1995Domestic IPO, Government stake reduced to approximately 72%
2004IDBI transforms from a DFI into a full-service commercial bank along with a continued mandate for development financing under the name of IDBI Ltd
2005Amalgamation of IDBI Bank Ltd., its erstwhile subsidiary, and IDBI Ltd.
2006Amalgamation of United Western Bank and IDBI Ltd.
2011Merger with its subsidiaries, IDBI Home finance and IDBI Gilts with itself


LIC of India completed acquisition of 51% controlling stake in IDBI Bank on January 21, 2019, making it the majority shareholder of the Bank

Business Review

During the year ended March 31,2020, the Bank continued to make progress on its strategic objectives even as the year saw significant challenges. The Bank, positioning itself as a retail-focused bank, continued to strategically ramp up its business in retail and priority sectyor segments, while scaling back its corporate exposure. In consonance with this strategy, the Bank pursued initiatives to expand its Retail, Agri and MSME (RAM) asset book which, due to its granular nature, would help the Bank to achieve a more stable and diversified asset mix. Simultaneously, the Bank focused on augmenting its low-cost deposit base, i.e. CASA deposits and retail term deposits, while reducing reliance on institutional deposits. This strategy has aided the Bank in progressively reducing its cost of deposits as well as cost of funds during the year. The crux of the Bank’s business strategy has been to pave the way for ensuring stable operations in a risk-calibrated and granular manner. 2

The Bank’s strategic initiatives received a further impetus with the Life Insurance Corporation of India (LIC) acquiring a majority stake in the Bank in January 2019 and becoming its promoter. The stake acquisition opened up new business avenues of mutual synergies for both the entities. To identify and tap these areas of synergy, a joint Task Force with members from both the Bank and LIC has been constituted. A Working Group has also been set up to oversee the implementation of the initiatives identified by the Task Force. The synergy initiatives are aimed at serving the Bank’s customers and the LIC family under one roof.


Retail Banking

Retail Liability Products

The Bank continued to undertake a number of initiatives across the entire spectrum of Current Account, Savings Account and Term Deposit products and services to meet the evolving banking and financial needs of various customer segments covered under the retail and corporate sector.

The Bank introduced the concept of ‘IDBI Kutumb – Family Banking’ under which the primary family member can maintain the balance on behalf of the entire family instead of each family member maintaining minimum balance individually.

NRI Services

The Bank continued to offer a wide bouquet of banking products and services for NRI customers in alignment with their banking and financing needs, ranging from basic Non Resident External (NRE) Account, Non Resident Ordinary (NRO) Account and Foreign Currency Non Resident (FCNR) deposits to value-added services such as forward cover on FCNR deposits, Portfolio Investment Scheme (PIS) for investments in Indian secondary stock markets, overdraft facilities against NRI deposits, Home Loans, Loans Against Property, among others.

Retail Assets

The Bank continues to target a progressively larger retail business portfolio to facilitate a more balanced business mix, in keeping with its intended positioning as a full-service new generation commercial bank. Pursuant to the same, the Bank currently offers a bouquet of retail asset products primarily aimed at meeting the customised needs of customers in the retail banking segment. Retail asset products offered by the Bank include Housing Loans, Loan against Property, Personal Loans, Education Loans, Vehicle Loans, among others. The Bank periodically reviews all its product offerings to remain relevant in the banking industry. Taking into account the emerging business environment and customer preference, the Bank also carries out modifications/ innovations/ customisations to the existing products as well as introduces new products on a regular basis. At present, the Bank’s Structured Retail Assets (SRA) loan portfolio contributes about 34.44% of its total advances portfolio.

During the year, the Bank has emerged as one of the leading players in the structured retail finance segment with best product offerings and services. Notwithstanding the challenging economic environment during the financial year and further aggravated by the national lockdown in the crucial month of March 2020 to contain the spread of Covid-19 pandemic, the Bank registered a book growth of 9% on a year-on-year basis.

Credit Cards

The Bank offers five credit card variants under different network schemes, which are (a) RuPay Scheme - Winning Select; (b) Visa Scheme - Royale Signature, Aspire Platinum & Imperium Platinum; and (c) Mastercard Scheme - Euphoria World. The card variants are targeted at different customer segments based on their profile and needs.

During the year, the Bank identified approximately 1.13 lakh potential customers for offering pre-approved Credit Card with pre-sanctioned credit limit, without any additional documentation. As a first-of-its-kind marketing initiative, the Bank carried out targeted digital marketing campaign through online channels, including social media viz. Facebook, Google, LinkedIn etc. in order to communicate with individual customers.

Digital Banking

The Bank is committed to promote and enhance the distribution of various digital banking products viz. Debit Cards, mobile banking, internet banking, Point of Sale (PoS), Digital PoS, Internet Payment Gateway, consistent with the GoI’s ‘Digi Dhan Mission’ aimed at encouraging greater use of digital payments by all sections of the society. The Bank has designated one officer at every retail branch as a ‘Digital Guru’ to act as a single point of contact for all digital product related queries.

Synergies with LIC

With the majority stake acquisition by LIC in the Bank in January 2019, the Bank has been proactively taking several initiatives to leverage the synergies with LIC. The Bank has identified specific actionable points and has also designed new best-in-class products and services to capitalise on the business potential in terms of augmenting its Current Account and Saving Account base and its asset portfolio. The Bank is also utilising its distribution channel/ touchpoints to source business as a Corporate Agent of LIC under bancassurance channel. The Bank and LIC were able to mutually benefit from these short-term synergies.

The Bank has designed and launched a wide array of products and services to facilitate payments and collection related requirements of LIC, as an institutional client. This has played a vital role in building the Bank’s Current Account book on account of LIC business. At present, LIC has more than 28 crore policy holders which could be further leveraged by the Bank. With an objective of increasing customer reach and penetration in the retail segment, the Bank has designed and launched personal banking products to service banking requirements of staff of LIC and its subsidiaries, agents and policyholders.

Priority Sector Banking

The Bank has been contributing significantly to Priority Sector Lending (PSL) as mandated by the RBI. As per the regulatory requirement, the Bank focused on financing to Micro Enterprises, Direct Agri Non-Corporate (DANC) and Small & Marginal Farmers (SFMF) during the year. The Bank also continued its efforts to extend its reach through the corporate BC/BF channel and tied-up with about 39 corporate BCs/ BFs so far.

Corporate Banking

The Bank’s corporate banking portfolio includes exposure spread over varied sectors such as power, oil & gas, textiles, telecom, cement, steel, engineering, construction, paper & paper products, electronics & electrical equipment, sugar, chemicals, automobiles, Non-Banking Financial Companies (NBFCs), etc.

Asset Quality

The Bank continued to focus its efforts towards containment of fresh Non-Performing Assets (NPAs) and maximising recovery from the existing impaired assets. As at end-March 2020, 72.47% of the Bank’s Total Assets were Performing Assets, whereas 27.53% were NPAs. The focussed efforts by the Bank have aided in containing fresh accretion to NPAs/ Slippage Ratio to only 6.35% of Standard Advances in 2019-20 as against 10.67% in 2018-19.

Recovery from impaired assets and upgrade of NPAs to Performing Assets during the year was at ` 7,842 crore, which facilitated the Bank to reduce the end-level NPAs to ` 47,272 crore as on March 31, 2020.

Adequate provisions were made in conformity with extant regulatory guidelines and as a prudent approach, the Bank has increased the Provision Coverage Ratio (PCR) from 82.88% as on March 31, 2019 to 93.74% as on March 31, 2020.

As of March 31, 2020, a total of 228 cases with an aggregate gross principal outstanding of ` 46,113 crore (including Non Performing Assets/ Technically Written-Off (TWO) Assets), were undergoing CIRP within the ambit of Insolvency and Bankruptcy Code (IBC), 2016. The Bank was able to resolve a few of these cases and recover a sum of ` 2,949 crore during the year 2019-20. Furthermore, a few other cases are expected to be resolved in the year 2020-21.

During the year, the Bank also sold NPAs to Asset Reconstruction Companies (ARCs) for recovery of ` 210 crore. A recovery of ` 826 crore was made from TWO accounts during the year.

Credit Monitoring Group

The Bank set up a dedicated Credit Monitoring Group (CMG) in May 2017, with the major objectives of monitoring the onset of stress, monitoring of credit administration parameters and structured loan review

Trade Finance

The Bank’s Trade Finance (TF) products and services to customers are provided through its 39 Category B Authorised Dealer TF centres and 177 identified Retail TF branches. The TF products and services cover various fund and non-fund based facilities like export credit, bill discounting, letter of credit, bank guarantee, remittances etc. While carrying out the TF operations within stipulated timelines, compliance with regulatory and other related guidelines are duly ensured. With a view to further improving the turnaround time (TAT), build in more efficiency in processing and compliance, as also to enhance the Bank’s reach to customers, the Bank has centralised its TF Operations by setting up Centralised Trade Processing Centres (CTPCs) in Mumbai and Chennai.

Government Business

The Bank acts as an agent for Central Government and State Governments to manage their receipts and payments. The Bank is authorised to collect Central Government Taxes viz. Direct Taxes, Customs Duty and Goods & Services Tax (GST). The Bank is also active in collection of State Receipts in 18 States and two Union Territories. The Bank facilitates 24x7 internet banking facilities for tax payments.

Cash Management Services

The Bank is committed towards providing effective Cash Management Services (CMS) to help corporations accelerate their collections, efficiently handle their bulk payments and smoothen their flow of funds. It offers a comprehensive range of collections and payment solutions to suit the needs of corporations and put them in complete control of their cash position. The Bank offers various solutions like National Automated Clearing House (NACH), Virtual Account Facility, Utility Payments, Direct Debit facilities and other customised e-solutions that have been technologically integrated (Host-to-Host) with client systems. The Bank is also authorised to participate in the e-freight payment system of Indian Railways and is collecting e-freight in 12 Zones.

Treasury Operations

The Bank’s Head Office in Mumbai has an integrated treasury, which covers various segments like money market, fixed income, foreign exchange, derivatives and equities. The Bank also regularly tracked various market segments and took acceptable level of positions for trading gains.


Financial Highlights

As on March 31, 2020, the Bank’s aggregate deposits and advances touched Rs 2,22,424 crore and Rs 1,29,842 crore, respectively.

During the year under review, the Bank’s total income amounted to Rs 25,295 crore, comprising interest income of Rs 20,825 crore and other income of Rs 4,470 crore. Interest expenses stood at Rs 13,847 crore and operational expenses at Rs 6,336 crore, accounting for total expenditure (excluding provisions and contingencies) of Rs 20,183 crore.

Total provisioning of the Bank declined for the year due to lower provisioning for Non-Performing Assets (NPAs). The provisions include Rs 13,920 crore towards provision for Non-Performing Assets (NPAs), bad debts written-off and investments. As the provisioning remained substantial, the Bank incurred a net loss of Rs 12,887 crore during FY 2019-20.

While the Earnings per Share (EPS) during the year was negative due to the losses, the Book Value per Share (excluding intangible assets) stood at Rs 11.21 as at end-March 2020.        

IDBI Bank Consolidated December 2020 Net Interest Income (NII) at Rs 1,816.29 crore, up 17.75% Y-o-Y 3

January 29, 2021; Reported Consolidated quarterly numbers for IDBI Bank are:

Net Interest Income (NII) at Rs 1,816.29 crore in December 2020 up 17.75% from Rs. 1542.52 crore in December 2019.

Quarterly Net Profit at Rs. 393.15 crore in December 2020 up 106.86% from Rs. 5,728.70 crore in December 2019.

Operating Profit stands at Rs. 1,668.57 crore in December 2020 up 28.13% from Rs. 1,302.28 crore in December 2019.

IDBI Bank EPS has increased to Rs. 0.38 in December 2020 from Rs. 5.88 in December 2019.

Recent developments

Cabinet may soon take up divestment of 45.5% stake in IDBI Bank: Report 4

April 13, 2021; he Union Cabinet may consider a proposal to divest the government's 45.5 percent stake in IDBI Bank. An approval will give the Department of Investment and Public Asset Management (DIPAM) the authority to move ahead with the divestment process, Business Standard has reported.

The government will also consult LIC, which owns 49.2 percent of IDBI Bank, before beginning the stake sale process, the report said.

"DIPAM cannot move forward with the divestment process until an approval from the cabinet is received, given that banks come under work allocation of the DFS. After the cabinet's approval, intermediaries can be appointed," an official told Business Standard.

The government's plan to sell its holding in the lender was delayed due to the COVID-19 pandemic, the report said.

"Although the process should have moved faster, the company will be able to close the transaction this financial year," the official told the paper.

On March 10, the Reserve Bank of India (RBI) removed the LIC-controlled bank from its prompt corrective action (PCA) framework.

Presenting the Budget on February 1, Finance Minister Nirmala Sitharaman proposed to take-up the privatisation of two state-run banks along with IDBI Bank in FY22.


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Created by Asif Farooqui on 2021/04/19 18:38

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