IDBI Bank hires BCG to advise on turnaround plan

Public sector lender IDBI Bank has hired the Boston Consulting Group (BCG) to accelerate a turnaround programme and improve its financial performance.

M K Jain, the bank’s managing director, said: “BCG will assist us to identify areas for cost containment and revenue maximisation.” IDBI has had mounting losses and due to the size of its non-performing loans it is under the Reserve Bank of India’s Prompt Corrective Action plan.

The bank expects to identify and address existing gaps, capitalise on core strengths and improve products and processes with BCG’s help, it said on Tuesday. The focus will be on four areas — revenue enhancement, cost control and reduction, asset productivity and overall programme management. BCG had advised IDBI in 2001, when the latter was a development finance institution, on transiting to become a universal bank.

IDBI has also decided, said an executive, to appoint a human resource advisor and information technology experts, to improve its systems. It has tepid revenue growth at a time when the amounts set aside to cover for bad loans are escalating. It is also struggling in meeting the capital adequacy norms. The net loss was ~853 crore for the quarter ended June, on a sharp rise in provisioning for bad loans and a fall in net interest and other income.