IDBI Bank Ltd: IDBI Bank maps out turnaround strategy, loan recovery key

MUMBAI: Struggling state-run lender IDBI Bank on Thursday said it had crafted a comprehensive turnaround strategy that involved shoring up its capital base and pushing for more effective loan recovery plan for its bad loans.

The bank has been under the fire from rating agencies the entire week. ICRA and CRISIL downgraded the bank on Tuesday due to deterioration in capital position and asset quality. The rating stands at BBB-, which is one rating above junk. On Thursday, Moody’s too, downgraded the bank citing asset quality worries.

“We are looking at all avenues to improve our capital position and bring the bank on the recovery track,“ said MK Jain, MD, IDBI Bank. “We will look at aggressive re covery and cost cut ting measures and plan on churning our corporate book and risk weighted assets which should also ease the pressure on capital.“

The bank in a statement said it will employ aggressive recovery measures and prevent further slippages from its books. Given the stress in the corporate sector, the bank said it will restrict growth in the corporate loan book and focus on increasing retail and priority sector asset base. A move intended to help the bank reduce risk weighted assets and improve capital ratios in the short term.

The bank is also planning to raise additional capital in the medium term and has received a capital infusion of Rs 1,900 crore from the government. The bank will also improve its capital base through sale of non-core assets and churning of corporate loan book to reduce risk weight of the portfolio.

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