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IDBI discusses 'universal banking' with govt

Industrial Development Bank of India on Wednesday discussed its long-term strategy of moving towards 'universal banking' with the government and plans to mop up Rs 30 billion through bonds issue this fiscal.

The leading domestic financial institution also targets to bring down its non-performing assets ratio drastically to below 10 per cent by March 2002 from 14.8 per cent in the last fiscal, official sources told PTI after a meeting of officials of IDBI, RBI and ministry of finance.

IDBI officials confirmed the development saying, "an FI cannot continue to function and has to go for universal banking, which is part of IDBI's long-term strategy."

For smooth transition to universal banking, enabling IDBI to go for both term lending and working capital finance, RBI has been requested to change prudential guidelines to include infrastructure lending as part of priority sector lending, the officials said.

Reserve Bank of India was also requested to treat statutory liquidity ratio and cash reserve ratio on an incremental basis, which would enable IDBI to conform with the prudential norms prevalent for banks.

Sources said RBI has agreed to consider these proposals which would enable FIs like IDBI and ICICI to convert into universal banks after a few years.

As part of short-term growth plans, IDBI would tap the markets within 1-2 months and plans to raise about Rs 30 billion this fiscal.

"We will file application for the umbrella proposal with Securities and Exchange Board of India shortly," IDBI officials said.

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