IDBI to cap corporate exposure to ~500 cr

With the exit from Prompt Corrective Action (PCA) framework, IDBI Bank is looking to disburse about ~4,500-5,000 crore to corporates, predominantly mid-sized manufacturing units, in the current financial year (FY22).

The focus will be on sectors such as steel, cement, pharma, and chemicals.

The bank will cap the exposure limit of one entity at about ~500 crore to avoid chunky exposures. It, however, may look at large exposure only for high-rated public sector units, the bank’s executives said.

Rakesh Sharma, managing director and chief executive of IDBI Bank, said the lender expects to grow its loan book by 10 per cent in FY22 with calibrated exposure to corporate accounts and a thrust on the retail segment.

The bank is also looking to grow its ~45,000 crore corporate book by about 10 per cent.

Last week, the Cabinet Committee on Economic Affairs paved the way for both the government and Life Insurance Corporation (LIC) to reduce their stakes in IDBI Bank. While the government holds 45.48 per cent, LIC has 49.24 per cent in the lender.

The bank, which was under PCA from 2017 till March 2021, saw its advances marginally fall to ~1.28 trillion in March from ~1.29 trillion a year ago. The PCA regime placed curbs on bigticket lending and expenditure and called for a turnaround plan. While the share of its corporate segment in the loan book fell by 6 per cent year-on-year, that of the micro, small, and medium enterprises advanced to 8 per cent. The retail saw a 3 per cent rise in its share to 42 per cent, according to the bank presentation to analysts.

EPC and infrastructure stand low on the bank’s priority. For existing clients, the bank will enhance working limits based on an assessment of risk and financial profile.

Its capital adequacy stood at 15.59 per cent in March, from 13.31 per cent a year ago and 14.77 per cent in December 2020.