IDBI to
become a universal bank
Our Banking Bureau
29 October 2001
 Mumbai:
The Industrial
Development Bank of India (IDBI) is all set to covert itself into
a universal bank. IDBI board, at its meeting on 27 October, passed
a resolution to become a one-stop shop for all kinds of financial
services.
IDBI would seek to
achieve this objective by undertaking a reverse merger with a
private or a public sector bank. A draft proposal to this effect
will be submitted to the Reserve Bank of India by October 31.
Earlier last week, IDBI’s
rival, ICICI Ltd, had announced that it would merge with ICICI
Bank to create India’s second-largest commercial bank and the
country’s first universal bank.
IDBI had earlier
approached the RBI for an extension of the tenor of an existing
soft loan to help it convert into a bank and to maintain
additional regulatory requirements.
According to analysts,
the conversion into a universal, or a one-stop bank, will allow
IDBI to access retail deposits of less than one-year maturity,
that usually carry low rates of interest.
 The
rating agency Crisil had in July downgraded IDBI’s bonds and
certificates of deposits to high from highest safety. It cited
poor asset quality and reduced spreads, which analysts say may
have made it more difficult for the term lender to tap the market
for funds.
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