GROUP NO.

1C Ankita Jain Akansha Misra Disha Mahajan Indranil Bhowmick Jyoti Jain

Industrial Development Bank of India (IDBI)

Genesis
1964 - Established as a wholly owned subsidiary of the Reserve Bank

of India (RBI) Established as a DFI with the following functions: Plays the role of coordinator at all India level. Providing financial assistance for the establishment of new projects as well as for expansion, diversification, modernisation and technology upgradation of existing industrial enterprises. undertakes wide-ranging promotional activities including entrepreneurship development programmes for new entrepreneurs, provision of consultancy services for small and medium enterprises, upgradation of technology and programmes for economic upliftment of the underprivileged.

 Assistance to backward areas by setting up of voluntary agencies, support to Science and Technology Entrepreneurs Parks, Energy Conservation, Common Quality Testing Centres for small industries, SIDBI etc.. TCOs offer diversified services to small and medium enterprises in the selection, formulation and appraisal of projects, their implementation and review. IDBI played a prime role in setting up of the Entrepreneurship Development Institute of India for fostering entrepreneurship in the country. Pioneered capital market development By setting up National Stock Exchange an electronic Stock Exchange, NSDL a Securities Depository, CARE a Rating Agency, SHCIL a Depository, etc.

 Products and services Project finance, equipment finance, asset credit, equipment lease etc. Professional advice and services for issue management, project

evaluation, corporate restructuring, share valuation etc. Set up subsidiaries: IDBI Bank IDBI Capital Market Services Ltd. IDBI Investment Management Company Ltd.

1976 - 100% ownership transferred to Government of India (GoI) 1995 - Domestic IPO reduced GoI stake to 52.3%. 2003 Acquired Tata Finance Ltd. and entered into retail finance

sector. 2004 converted into a banking company

PROBLEMS FACED BY IDBI AFTER LIBERALIZATION

1. 2. 3. 4.

Net profit dropped. Decline in sanction and disbursements. Lack of proper leadership. Break-up of deal between DPC(Dhabol power corporation) & Maharashtra govt. 5. IDBIs NPA increased rapidly. 6. Improper business practices. 7. ICRA downgraded IDBIs rating in 2001. 8. Failed to retain its top-rated customers. 9. IDBI was not triple-A-rated entity. 10. High cost of funds. 11. Investors confidence in IDBI has come down drastically.

IDBIs Financial Performance Over The Year (In Rs. Crore)

Particulars Sanctions Disbursement Income PBT PAT Gross NPA Net NPA Net NPA(in % ) 20022003 2889 3924 6371 455 401 16006 7308 14.16 2001-2002 13505 11151 7175 414 424 6.49 14449 6500 11.69 2000-2001 23178 17747 7834 734 691 10.2 9849 7675 13.44 1999-2000 22060 17063 7859 1027 947 14.07 8236 6488 12.05 1998-1999 18939 14473 7464 1300 1258 18.7 -

EPS(in Rs. Crore) 6.15

WAYS OF REVIVAL
Reverse merger with its banking subsidiary IDBI Bank Splitting IDBI into a good asset IDBI and an NPA IDBI Hive off its stake in IDBI bank of worth Rs 1,500 crore.

Better option is to go for merger with IDBI bank

Contribution of Merger
To meet out with emerging challenges and reforms in financial sector, it reshape its role from a development finance institution to a commercial institution. This merger provides an array of customer-friendly services to its existing and prospective clients. It create a firm foundation for IDBI Ltd. to compete with other banks, supported by strong operational synergies. The government will hold 51.3% stake in the merged entity,

Shareholding Pattern : Dec 31, 2008

IDBI Bank Business Chart

IDBI BANK

RETAIL BANKING

DEVELOPMENT BANK

SAVING ACCOUNT

CURRENT ACCOUNT

INVESTMENT

PERSONAL SAVING

CORPORATE SAVING

Merger issue
The swap ratio -100:142 (100 shares of IDBI for 142 shares of IDBI Bank). EGM - February 23 for seeking the approval passed by two-thirds of its shareholders. Merged entity which will have assets - Rs 78,000 crore manpower - over 4,000 By adding IDBI Banks network to its own. it have 199 or 200 branches 300-odd ATM Rs 56,000 crore customer asset portfolio

No. of Branches Metro Urban Semi Urban Rural 178 173 99 53

Benefit
IDBI Ltd is now virtually a universal bank. total business size of around Rs.1,34,189 crore, It uses information technology (IT) platform to structure and deliver personalized banking services and customized financial solutions to its clients. Pole position in the technological arena -> Card-to-Card Money Transfer -> Online tax payment -> Visa Off-us mobile recharge facility -> Air Ticketing through ATM etc.

Core income growth

 Gateway to low-cost deposits. Positive impact on the Banks overall cost of funds and facilitate lending at more competitive rates to its clients. Highest standards - corporate governance (operations) IDBI would continue -> Products and services as part of its development finance role. -> An array of wholesale and retail banking products, for specific cash flow requirements of corporate and individuals.

 The provision coverage to the tune of 97% of gross NPAs is by far the highest in the sector.

Strong Investment Portfolio

Name IDBI C apital IDBI Homefinance IDBI Gilts IDBI Fortis ARC IL C ARE C C IL NSDL NSE STC I SIDBI SHC IL IDFC IFC I Listed/Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Listed Listed % Holding 100.00 100.00 100.00 48.00 19.95 26.75 6.50 30.00 5.00 7.28 19.21 16.96 1.79 5.01

Subsidiaries

Network & delivery channels (Current Scenario)

504 branches, 496 counters 871 ATMs Presence in 316 important commercial centres in India Presence in 100 cities Internet banking Retail customer base: 5 million + Corporate customers: 3000 +

Achievements
Awards Won during the year
IT Team of the Year(2007) Award of IBA5 Best IT Security Practices Award of NASSCOM Best CTO Award of Cyber Media Won two special awards, for Best Payments Initiative and Outstanding Achiever of the Year" (2007)

Key Projects
Airline ticketing through ATMs Setup of Data Center and Disaster Recovery Center Internet Banking Enabled Multi-Functional KIOSK Kolkata and Haldia Port Trust Internet Banking Payment and MIS Modules Online Payment of Central Excise & Service Tax

New Business Initiatives

IDBI completed the reorganization of its business into separate verticals focused on SME, Agri-business, Personal Banking, Mid Corporate, Large Corporate and Infrastructure. IDBI Fortis Life Insurance IDBI Gilts Bank will also open branches in Singapore, Dubai and Shanghai, with either the Dubai or Singapore branch opening likely by the end of March Steps initiated for mortgage guarantee business Took another initiative in reaching out to the smaller clients by introducing facility of Online application for educational loan. Bank introduced a new product for encashment/sale of Foreign Currency by NRI Clients and encashment of Travelers Cheques by Banks existing NRI customers.

Business Strategy
Optimize mix of corporate and retail banking Increase product offering by leveraging corporate relationships Rationalize and reorient human resources through on-going training Improve technology infrastructure Enhance & implement enterprise-wide risk management systems Focus on fee based income to boost profitability Strengthen brand equity Enhance market share

Pursue organic growth opportunities Leverage core competency in project financing while creating additional business opportunities in retail & commercial banking Inorganic growth domestically through bank acquisitions/ mergers Entry into Insurance, Asset Management

Business

operated as separate Retail Banking and Corporate Financing SBU(strategic business units)s A common Treasury, Risk Management, Audit, IT and other support operations Integrated and Rationalized branch network