In what should further consolidate its position as a development finance institution (DFI), public sector lender IDBI Bank is focusing on project appraisal and advisory services, mainly for upcoming public-private partnership (PPP) projects. The bank wants to enter markets in African and Gulf countries by opening branches for its development finance business.
Following the Centre’s push for infrastructure development — particularly urban infrastructure — under the PPP model, IDBI Bank expects its business to double in the next three years.
“The commercial banking business has become highly competitive and our core competence has been in project appraisal as a DFI. We want to focus more on that. We plan to grow on two pillars, development finance and commercial banking. Development finance will continue to have 70 per cent share in our business, while commercial banking is 30 per cent,” said Kishor Kharat, MD and CEO, IDBI Bank, during an interaction here.
Having an operational branch in Dubai’s international finance centre, IDBI Bank now plans to have at least 10 branches in the next three years covering Africa, the Gulf Cooperation Council (GCC) and Asia regions.
These branches will focus on the development finance business.
“We will have more DFI businesses in overseas markets. The model which we are working on is less capital intensive. We may even form partnership for setting up the DFI. Unless government patronage is there, development finance will not work,” said Kharat.
The bank is in the process of formulating strategy documents, which, once approved by the Board, will be implemented over the next three-five years. “With this, IDBI will double its business in the next three to five years.”
Gung ho on growth Commenting on the upcoming monetary policy review by the Reserve Bank of India, Kharat said he expected a rate cut of 25 basis points. “Credit offtake will begin after the next six months. We can expect minimum 8 per cent GDP growth rate in the next three years,” he added.
However, the bank continues to have about ₹6,000 crore worth of exposure in stalled projects, most of which are in the power and road sectors.