IDBI Bank to receive Rs 20,000 cr from LIC open offer

In October, IDBI Bank had said that LIC’s open offer to purchase shares from the minority shareholders of the state-owned bank will kick-start from December 3.

The open offer, at Rs 61.73 per share, will close on December 14.
LIC has offered to acquire 204.15 crore equity shares, representing 26 percent of the fully paid-up equity capital of IDBI Bank.

It has received the Reserve Bank of India's (RBI) approval for the ownership change. "The approval from the Competition Commission of India (CCI) and the final approval from the Securities and Exchange Board of India (SEBI) is awaited," Sharma said, adding that it will also get more clarity on LIC's holding of over 15 percent in a bank, which violates the Insurance Regulatory and Development Authority of India's (IRDAI) rules.

IDBI Bank has posted a loss for the eight consecutive quarter.
In the midst of the transition, the bank reported a hefty loss of Rs 3260 crore in the second quarter ending September 2018 of the current financial year as bad loans continued to rise to 31 percent of its total loans.
In comparison, the loss a year ago stood at Rs 198 crore.

Net interest income, or the core income, fell 21.5 percent to Rs 1300 crore compared to Rs 1657.5 crore in the same period last year.

It continues to top the list of banks with the highest bad loans.

The gross non-performing asset (NPA) ratio rose to 31.78 percent in the second quarter as compared to 30.78 percent in the first quarter of the year.
In absolute terms, bad loans rose to Rs 60,875.49 crore in the July-September period as compared to Rs 57,807 crore in the previous three months.

The provisions for NPAs stood at Rs 5481.64 crore in Q2 versus Rs 4602.55 crore in Q1. Post provisioning, the net NPA ratio was at 17.30 percent at the end of the second quarter as compared to 18.76 percent in the previous quarter.

Recoveries:

The bank expects recoveries of close to Rs 7500 crore over the next two quarters. Of these about Rs 4,500 crore will be from the accounts under National Company Law Tribunal (NCLT) proceedings, Sharma said.
The bank's total assets facing insolvency proceedings from the RBI's first two lists stand at Rs 25,000 crore.

The government-owned bank, which is under the RBI’s prompt corrective action (PCA) framework, hopes that fresh capital from LIC will hasten the process of cleaning up the bank’s books.

Sharma pointed out that the bank is focusing on retail growth and reducing exposure to the large corporate sector.

As on September end,the bank’s advances were down 14 percent over last year. Of this, retail advances constitute 46 percent.

Deposits fell 2.2 percent over last year but savings deposits rose 5.4 percent.