Indian Bank scraps plan to rope in partner for mutual fund business

Explores optionsof merging mutual fund asset management company with itself.

State-run lender Indian Bank has scrapped its plan to rope in a strategic partner for its mutual fund business because of uncertain macroeconomic environment and subdued market sentiments, Chairman and Managing Director T M Bhasin said on Saturday.

“It is not a right time to enter the mutual fund market. So, we are deliberately keeping a low profile,” Bhasin told Business Standard on the sidelines of BANCON 2011, an annual banking event jointly organised by Indian Banks’ Association and Indian Overseas Bank.

Indian Bank was earlier in talks with three overseas players for a strategic partnership in its mutual fund arm. The deal was expected to be signed by October and the lender expected to commence operations jointly from December.

“For the time being we will lie low in mutual fund. We may revisit our plan once the market improves. At least this financial year nothing will happen,” Bhasin said.

Indian Bank Mutual Fund through its asset management company Indfund Management was managing 12 close-ended schemes.

Nine schemes out of this were redeemed on maturity, while the rest three were transferred to Tata Mutual Fund on November 2001. The bank's mutual fund arm has not launched new schemes ever since.

The bank is also exploring options of merging the mutual fund asset management company with itself.

Bhasin said the bank had also decided to close all the 60 offices of Indbank Merchant Banking Services, a wholly-owned subsidiary of the bank offering merchant banking, advisory and broking services. The company will now operate from Indian Bank’s branches and pay a concessional rent to the bank.

“This will help us in earning revenues and help them in cutting expenses on rent. We will have around 200 counters of Indbank Merchant Banking Services across our branches in major cities,” Bhasin said.

He added the bank's housing finance arm will also be merged soon.

Source: Business Standard