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IDBI Div I NIT 95 Chairman's Speech > Engineering - Heavy > Chairman's Speech from IDBI Div I NIT 95 - BSE: 531883, NSE: IDBIMFDIV


BSE: 531883|NSE: IDBIMFDIV|ISIN: INE008A01015|SECTOR: Finance - Investments
IDBI Div I NIT 95 is not traded in the last 30 days
IDBI Div I NIT 95 is not traded in the last 30 days
Mar 18
Chairman's Speech (IDBI Div I NIT 95) Year : Mar '19

Dear Shareholders,

I assumed the position of Chairman of IDBI Bank in May 2019. It is indeed a privilege for me to be associated with the Bank which has a rich legacy of partnering India in its growth and development. IDBI Bank’s journey is marked by transformation in tandem with the evolving business environment. In January 2019, Life Insurance Corporation of India (LIC) acquired 51% stake in the Bank, becoming the promoter. With this, a one-of-a-kind financial conglomerate came into existence with LIC and IDBI Bank offering a gamut of banking and insurance products under one roof.

The year 2018 saw deceleration in global economic growth as several major Emerging Market and Developing Economies (EMDEs) slowed down. Growing trade protectionism emerged as a prominent feature of the global policy dialogue. In this backdrop, the Indian economy remained fairly resilient, though not without its own set of challenges. India’s economy grew at 6.8% in 2018-19, marking a decline from 7.2% in 2017-18, on the back of domestic factors such as disparate monsoons and muted consumption and investment demand which restricted growth in agriculture and services sectors. At the same time, Consumer Price Index (CPI) inflation rate, which is the mainstay of the monetary policy, remained moderate at 3.4% in 2018-19. Keeping in view the weakening growth and soft inflationary pressures, the Reserve Bank of India (RBI) reduced the Repo Rate with the intent to support economic growth.

With driving growth assuming primacy in the domestic policy dialogue, the importance of revitalising the banking system came to the fore as India continues to be a bank-led economy. The banking sector in India has been beleaguered by concerns on the asset quality front, frauds and consequential adverse impact on profitability. In response to these challenges, substantive reforms in governance and regulatory regime as well as legal reforms have been undertaken to lay the foundations for a stronger banking sector. Measures such as the PSB Reforms Agenda for Enhanced Access & Service Excellence (EASE) have laid out the framework for driving improvements in various areas including corporate governance, risk management and service standard of the banks. The action points outlined in the EASE framework are intended at ensuring responsive and responsible banking. Simultaneously, the enactment of the Insolvency and Bankruptcy Code (IBC) has provided the much-needed institutional mechanism for ensuring time-bound resolution of Non-Performing Assets (NPAs). Consequently, banks have made much headway in resolving NPAs, which has led to a decline in the NPA levels for most of the banks. There has also been a pick-up in the industry-wide deposit and credit growth, underscoring signs of revival. Banks, too, have become more alert to these ramifications of the recent challenges and are proactively strengthening their risk management and corporate governance practices. Compliance has emerged as one of key themes in the strategic business plans of the banks to avert any untoward incidents that may pose risk to its operations.

In this backdrop, it is also essential to understand that the banking space is undergoing a paradigm shift. Notwithstanding these challenges, the banking sector in India represents one of the biggest opportunities globally in terms of potential value. The policy emphasis on financial inclusion and digitisation is driving change throughout the economy. Keeping in mind the aspirational class clientele, most of whom are technology adopters, low-cost Indian platforms have been launched to promote digital payments. The availability of data in India has become more democratic with IndiaStack and open Application Programming Interfaces (APIs) allowing banks to access customer information from a single source. With these developments, financial players - both existing and the new entrants - have the opportunities to build innovative business models to serve their customers in a cost-effective and efficient manner.

The targeted segments represent the next growth drivers for the banking sector. Even as the policy and regulatory framework is evolving, it is abundantly clear that India is moving towards a digital, inclusive, and interoperable financial services market. With these emerging developments, the key for growth in the banking sector lies in harnessing technological prowess to create integrated digital infrastructures; combining traditional and non-traditional data sources to gain customer insights; and cultivating partnership-driven digital ecosystems.

The regulatory framework is also seeking to promote competition in the banking space by allowing entry of new and even non-traditional players. Thus, a new category, viz. differentiated banks, has been created for performing specific functions rather than providing full-service banking.

Thus, new entrants were licensed to operate as Payment Banks and Small Finance Banks. Keeping in view these developments, your Bank’s business strategy Is being shaped by the emerging trends as well as the current imperative to restore Its financial health. Towards this end, your Bank has also been progressively moving towards recalibrating its business mix to transition towards a capital-light and diversified model. Accordingly, your Bank has been focusing on augmenting the share of retail and priority sector loans on the asset side. On the liability side, concerted efforts are being made to boost the share of CASA and retail term deposits. With LIC acquiring 51% stake in your Bank, various areas of mutual synergies have been envisaged and the groundwork laid for some of these areas has been yielding positive results. The mutual synergies are expected to provide a further impetus to the Bank’s effort in ramping up its retail business. At the same time, the Bank recognises that asset quality remains an area of concern. Thus, all possible measures are being pursued under legal and regulatory framework by the Bank to maximise recovery and upgradations in the NPAs. Furthermore, the credit monitoring processes are being revamped to ensure close monitoring to arrest further slippages in the asset quality at nascent stage itself. The Bank stands to gain from qualified professionals at the helm and I am confident that their invaluable inputs will help in bringing about a favourable change in business culture that will help the Bank to drive sustained and profitable growth, thereby creating immense value for all its stakeholders.

The recent policy and regulatory reforms augur well for the banking sector in general as it would foster economic growth, and banks are an integral part of the process. The Bank will strive to capture the emerging opportunities by understanding the financial requirements of its customers. In a largely homogenous landscape of the banking sector, the Bank strives to differentiate itself by continually improving its service standards as well as trying to ensure seamless customer experience across channels.

As the Chairman of the Bank, I am happy to be a part of IDBI Bank’s journey. I am sure that the transformational initiatives and innovations undertaken by the Bank will help it to return to a profitable growth path.

With best wishes,

M. R. Kumar


Source : Dion Global Solutions Limited
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