By Anto AntonyIDBI Bank, the lender with Indias worst bad-loan ratio, is seeking to curtail its soured debt by selling Rs 100 billion ($1.4 billion) of stressed assets and stepping up efforts to recover dues from delinquent borrowers.We have set up a war room to focus on recovering the non-performing loans while another team is keeping a check on loans showing early signs of stress, Chief Executive Officer Rakesh Sharma said by phone.
The lender wants to sell stressed loans by June-end to quicken the pace of clean-up exercise.Burdened with the worlds worst bad-loan ratio, Indian lenders are stepping up efforts to recover delinquent debt after the Reserve Bank of India announced tougher rules.
The Mumbai-based lenders turnaround efforts gathered pace after Life Insurance Corporation of India, the nations largest insurer, bought a controlling stake from Prime Minister Narendra Modis government.
The insurer has infused more than Rs 210 billion into IDBI to bolster its risk buffers and bring it out of the regulators emergency programme that restricts lending.IDBI Bank will emerge from the Reserve Banks prompt corrective action framework by September as the bad-loan ratio narrows and profits rise, Sharma said.
Banks sanctioned by the regulator are restricted from lending and expanding their network while they mend their balance sheets.
IDBIs gross bad-loan ratio stood at about 30 per cent as of December 31, an exchange filing shows.The lender is also planning to raise about Rs 10 billion by selling its holding in National Stock Exchange and National Stock Depository over the next month, the chief executive said on Sunday.
According to Sharma, the bank will also complete the sale of its insurance and mutual fund units in 2019.Shares of IDBI Bank rose 4 per cent at 11 a.m.
in Mumbai trading.
It was the best performer on the 12-stock Nifty PSU Bank Index, which gained 2.6 per cent.Sharma also shared his views on the Iran payments business and capital raising.
Comments in the following QA have been edited and condensed:Will IDBI consider raising capital this yearThe bank will raise tier I and tier II capital in 2019.
We will tap the public market to raise these funds and LIC will participate in that round to retain their majority stake in the bank.
We would be coming into the market around September after our profit trajectory improves.Why is IDBI getting into the Iran oil payments businessIndian refiners payments for Iranian oil shipments were earlier handled solely by Uco Bank.
Now, the government has allowed IDBI Bank also to route these payments.
We are working out the processes and by March-end, we should start processing these payments.
As refiners are required to deposit any money destined for Iran without interest with us, the banks cost of funds and borrowings will come down.