IDBI submits capital revamp plan to govt

Public sector Industrial Development Bank of India (IDBI Bank) has submitted a proposal to the government to revamp its capital base.

The government nod for the revamp plan will help it pave the way to raise resources through rights and public offering to support business growth.

Currently, the bank has a comfortable capital adequacy ratio of 13.3 per cent (December 2007) with core capital (tier I) of 8.57 per cent. “We may need capital next year,” Chairman and Managing Director Yogesh Agarwal told reporters after inking a pact with Motilal Oswal Securities for online trading facility.

IDBI Bank entered into a strategic alliance with one of the country’s largest brokerage houses to facilitate online trading for the bank’s 2.5 million customers. A MoU to this effect was signed by O V Bundellu, deputy managing director, IDBI, and Motilal Oswal, CMD, MOSL, in the presence of Agarwal.

“The revamp involves conversion of part of long-term loans into equity. It is too early to issue a time plan as we submitted the proposal only recently,” an official said.

Agarwal said even while raising funds through rights and follow-on issue, care would be taken that government holding remains as it is. The government holding in the public sector bank at the end of December 2007 stood at 52.68 per cent.

Referring to the tie-up with Motilal Oswal Securities for equity trading, he said this arrangement with not be done at the cost of existing alliance with IDBI Capital Market through latter’s trading platform “idbipaisabuilder.com.”