Gunit Chadha, managing director, IDBI Bank, will pass on the baton to Ajay Bhimbett, head of retail banking, when he steps down on Thursday.

Chadha, who will take over as the India head of Deutsche Bank on Friday after a three-year stint at IDBI Bank, however, refused to confirm Bhimbett's promotion.

Bhimbett, whose appointment has been cleared by the Reserve Bank of India, is being made the CEO. The board is expected to formalise the appointment later on Wednesday.

Chadha was mum on the reasons behind his exit but made it clear that he would "pass on the baton to a successor who will drive the bank forward into its next growth phase to build scale."

To Chadha's credit, he has made IDBI Bank a quality institution with 0.36 per cent net non-performing assets, 4.8 per cent daily average cost of deposits and 24.6 per cent post-tax return on assets.

The bank has close to one million customers (as on June end it had 900,000 customers) and over Rs 2,000 crore (Rs 20 billion) retail assets.

However, it is still a small bank with assets of around Rs 9,000 crore (Rs 90 billion).

"We have the right platform in place and the bank is capable of scaling up its operations. The volume of business can only grow," Chadha told said.

IDBI Bank, according to him, is an example of building growth around quality.

Two major hindrances to growth that the bank has been facing are its inability to attract talent and lack of capital.

It was unable to attract talent following uncertainty about the fate of the bank with its promoters dithering on the reverse merger issue.

This also hampered the bank's capital raising programme, forcing it to compromise on asset growth.

In fact, in the first quarter of fiscal 2004, the bank's capital adequacy ratio slipped to below 9 per cent, the threshold limit as stipulated by the Reserve Bank of India.

"Now it is quite clear that the bank will not be merged with its parent. There should not be any problem in attracting talent," Chadha said.

He also said the upcoming rights issue will take care of the capital requirement. He, however, refused to say whether the two entities -- IDBI Bank and IDBI -- should continue to exist in their present avatars.

"It is a decision that the new management of the institution (which will turn into a bank) as well as that of IDBI Bank will take. It is up to them to see whether two can complement each other or there is any conflict of interest because of similar product offerings," Chadha said.

Both IDBI and IDBI Bank are into lending. Besides, IDBI recently floated a home loan subsidiary by buying out the portfolio of Tata Home Finance. IDBI Bank has a home loan portfolio of around Rs 2,000 crore (Rs billion) built over the last one and a half years.