IDBI Bank Ltd., which has the worst asset quality among Indian lenders, does not see any improvement at least till April even as it looks to sell non-core investments to shore up capital.
“Expect improvement on bad loans only in the next financial year,” MK Jain, managing director and chief executive officer at the state-run lender, told BloombergQuint in an interview. It's finding it difficult to sell non-performing loans due to an unfavourable pricing environment and conditions are not conducive to raise capital from markets, he said.
IDBI Bank, with gross bad loans of 24.11 percent as of June 30, on Wednesday announced a tie-up with the Boston Consulting Group to formulate a turnaround plan called ‘Project Nishchay'. The lender identified five non-core investments in August to sell its stake to raise Rs 5,000 crore: IDBI Federal Life Insurance Company, IDBI Asset Management Ltd., IDBI Trusteeship Services Ltd., National Securities Depository Ltd. and NSDL e-Governance Infrastructure Ltd.
The bank has sold stakes in Small Industries Development Bank of India and the Clearing Corporation of India.
The lender is on track to achieve the non-core asset sale target, Jain said without revealing the names of buyers in the two transactions. “Some banks and financial institutions picked up our stake in SIDBI,” he said.
Some cases at the National Company Law Tribunal may get resolved in the quarter ending March, while it shifts its focus to lending to individuals and small businesses, he said. The bank was trying to shed corporate clients in the cases where the risk-weighted assets are high, he said.
Watch the full interview with IDBI Bank's MK Jain here.
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