'IDBI Bank to open taluk, village-level branches for farmers'

IDBI Bank aims to climb to the No 5 slot in terms of business among the banks within the next three years, from the No 7 position it holds now, the Executive Director, Mr K.C. Jani, has said.

The bank, which has forayed into the insurance and mutual funds businesses, has no plans to dilute its stake to bring in a foreign partner, he said.

Speaking to newspersons in Coimbatore on the sidelines of the ‘money tree finExpo’, he said IDBI Bank had closed the last financial year with business of Rs 3.91 lakh crore and made a net profit of more than Rs 2,000 crore. The bank had, within eight years of its launch in 2004, climbed up to the No 7 spot among the banks in terms of business.

He said the aim was to achieve the No 5 position within the next two-three years. During the year, the bank would aim to cross Rs 3,000 crore in profit. He claimed that though IDBI was a PSU bank with 70 per cent holding by GoI, its services were not at a par with but better than its private sector rivals.

Mr Jani said the banking sector in the country was on average growing at 18-20 per cent annually. To achieve its goal of reaching the fifth position, “we have to grow slightly faster than that” and IDBI Bank plans to grow by 20-22 per cent to reach its target.

The bank has 1,000 branches and 15,000 employees.The average age of its employees at 33 is the lowest for banks in India. Its per capita profitability (profitability per employee) was the best in the industry.

He said the bank plans to open around 150 branches during this year. Apart from expanding the regular branch network, the bank plans to open smaller branches at the taluk level and larger banks at the village level with limited staff strength, to take care of the financial needs of the farmers. RBI has permitted the bank to open such branches without any formal licence where the population was less than one lakh, and the bank was gearing to open them in coming weeks.

On the impression that interest rate cuts by banks were not commensurate with the repo rate cut by RBI, Mr Jani said banks were trustees of the funds of the public. As RBI was reducing rates step by step, the banks too were adopting a step by step approach. Going forward, banks would do what the RBI desired them to do. He said IDBI Bank’s net interest margin was around two per cent as it paid higher interest on deposits while charging lesser interest on lending since it kept the customers’ interest paramount. But it was ‘not worried’ over that.

On whether the stubbornly high inflation gave hopes of a further rate cut, he said interest rates have started falling and it is expected that the decline in rates would continue. He said ‘even if it is not coming down, it will not go up.’

Asked whether the bank planned to offload part-stake in ventures such as mutual funds and insurance to bring in overseas partners to monetise its investment, the Executive Director of the IDBI Bank said “as on today we don’t have any plans” but going forward “in future, nobody can say”.

Agreeing that the value of its investment in subsidiaries was not reflected in its share price (IDBI shares were trading at about Rs 102 with a P/E of just 6), he said the group companies were doing well and there was no plan for an immediate offloading of stake in them.

Earlier, inaugurating the first edition of ‘money tree finExpo’ organised by the Indian Chamber of Commerce and Industry, Coimbatore, he urged the organisers to conduct it annually. Mr M. Krishnan, President, ICCI, presided.