No communication from govt on stake sale to IFC: IDBI Bank

There has been no communication from the government with regard to stake sale to IFC, says Mythili Balasubramanian, ED of IDBI Bank. Media reports have indicated that the government may sell some stake in the bank to International Finance Corporation (IFC).

The government currently holds a 76.5 percent stake in the bank.Below is the verbatim transcript of Mythili Balasubramanian's interview with Reema Tendulkar and Sonia Shenoy on CNBC-TV18.Sonia: Can you just tell us, is there any truth to the report that IFC is looking to buy the government's stake in IDBI Bank?A: We are also asking the same question around. I don’t think right now we have any concrete communication we can pass on from the organisation. So rather on this specific issue of IDBI equity shares, I would like to pass the question because we don’t have any specific communications to you.Reema: Have they at least approached you?A: No, we don’t have any concrete move on that.Sonia: In terms of a timeline there is a lot of talk that give and take everything, the deal could get done by the end of December that is by the end of this calendar year itself, is that something that you will be hopeful about to?A: We don’t have any communication which we can pass on as an organisation to the market.Reema: If hypothetically, IFC which is an arm of the World Bank does acquire stake in IDBI Bank, what will be the positives it can bring to the table? How would you read into a deal if they do buy it?A: I don’t want to hazard a guess on this.Sonia: There is a lot of talk about the strategic debt restructuring (SDR) case that is happening with Monnet Ispat and a whole host of other companies that are looking through the SDR route like Gammon, Electrosteel Steels, Jyoti Structures etc, just wanted to ask you first on Monnet Ispat, what is the exact exposure that IDBI Bank has to Monnet Ispat and can you update us on the names or the list of prospective buyers for Monnet Ispat?A: These are all transactions, which are being done by the entire consortium as a whole. So till the entire transaction concludes, we are all debating various options. SDR definitely is a route we have chosen and how exactly would the equity then be offloaded, how the management would be changed would take a little while before the whole thing is frozen.Sonia: Can you at least give us details on what exactly is the exposure that IDBI Bank has to Monnet Ispat and in terms of a timeline, by when will any buyers be found, is there enough interest in some of these assets?A: You have 18 months timeframe for SDR as per the policy. So basically what happens is bankers would keep on talking to various potential management people but it would take time because a lot of things will have to be debated, discussed but whenever banks feel we have a potential to look at an alternate management, we do go through this route and we will freeze it in sometime to come.Reema: Is it difficult to get a buyer for troubled assets like Monnet Ispat?A: No, it is not a question of it is troubled but when the bankers take the equity exposure, it is not just that you pass it on to somebody without sufficient debate, discussion. It is a question of how exactly you want to structure the whole thing, the timing, everything is involved. So it is not something which gets frozen upfront when you decide on SDR process itself. It does take some time. Bankers do have a few people in their visibility but actual culmination of the whole transaction into change of management will definitely take sometime.Sonia: Can you give us more clarity on whether there are any more SDR cases that IDBI Bank is looking at either Gammon or Electrosteel Steels, any other cases that you are looking at?A: Right now these are the cases, which have come on the table -- the four-five which the market is talking about but not many more right now in the offing. We will keep exploring the area.Reema: Let me talk about your stake in National Stock Exchange (NSE). You have close to about 5 percent stake in NSE, would you wait till perhaps the NSE goes for an initial public offering (IPO) before you monetise it or could you be interested in selling it earlier and any word from NSE whether they are interested in doing an IPO and if yes, how soon?A: Basically there is a move to make the stock exchangers get into the listing. The process is on as we know but as far as sale of our stake in NSE is concerned, it is not that we need to do it immediately. The bank would wait out and see the price movement and also an opportunate time and accordingly we will take a call. As on date, we have not started any process of selling our stake in NSE.Sonia: We should not expect any stake sale in this fiscal, in FY16, right?A: Right now we haven’t taken any such decision.Sonia: Things are starting to improve for the entire sector because of certain issues like for example, the Dabhol plant has started selling power and we were speaking with IDBI Bank a couple of days ago when your colleague did mention that things are improving for the sector as a whole. Your gross non-performing assets (NPAs) in the quarter gone by was close to 7 percent. Do you see it getting any better, do you see the gross NPAs falling in the second half of the year?A: One structural difference between other public sector undertaking (PSU) banks and IDBI Bank is the composition of retail versus the infrastructure lending or even large corporate lending because of the way IDBI was structured in the past as a development financial institution. So to that extent, when an industry persistently is in stress, the amount of stress which we will have to withstand will definitely be higher than many other banks which have a larger component of their advances to retail segment.So to that extent we have been impacted very badly but I think if you see the kind of accretion to NPAs in Q2, last July-September quarter to previous quarter, basically the absolute accretion has come down. We do expect that accretion should come down and some of the existing stressed accounts might become NPA. However, with the kind of improvement, which could augur in the industrial segment, we should be able to get over this and our NPA levels both in terms of actual recovery and improvement as also percentage gross NPA should come down from nowon.Reema: Gross NPA from 6.92 percent as of the last quarter, how much could it come down by March 31, 2016?A: Let us see. It would be lower but let me not put a number to it. The efforts are on to enhance the recovery from the existing NPAs and also to stem the further acquisition of NPA.