House panel asks FinMin to work out IDBI Bank rijig plan

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A Parliamentary panel has asked the finance ministry to work out a 'transformational plan' for IDBI Bank, since the bank is facing mounting bad loans in such a manner that it does not surpass the 'point of recoverability'.

"Department of financial services should effectively liaise with the IDBI Bank, for formulating a transformational plan with a target of putting the stressed projects back on track, bringing down the gross NPA to 3 per cent and net NPA to zero per cent by the fiscal year 2018-19,"

The panel has also recommended selling of non-core assets to fund the growth of the bank, asking the government to take necessary actions and submit a report to the panel in three months.

The panel's report further said that IDBI Bank needs to monitor so-called ‘special mention accounts’ to avoid additions to bad debt, boost recovery measures and upgrade non-performing loans to improve its asset quality.

"The committee, therefore, strongly recommend that the ministry of finance (department of financial services) should work out a renewed strategy with the management of the IDBI bank, to put in place the revamp plan of doubling the bank's business volume and reducing its gross NPA level," it said.

The committee on petitions also recommended that with a view to improving and strengthening regulation, supervision and risk management in IDBI Bank and the procedure of raising money through tier-II bonds should now be complied with basel-III norms.

Besides, it said, IDBI Bank should also make full use of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and debt recovery tribunals for recovering its NPAs.

The bank reported a net loss of Rs 2,255 crore in the December quarter, from a profit of Rs 56 crore in the previous three months of the current fiscal.

As on December 31, IDBI Bank's gross non performing assets (NPAs) ratio stood at 15.16 per cent and net NPA ratio at 9.61 per cent, up from 13.05 per cent and 8.32 per cent, respectively, in the September-ended quarter.

The bank's capital adequacy ratio stood at 11.29 per cent as on December 31, lower from 11.64 per cent in the previous quarter.

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