IDBI net up 34%, cuts lending rate

MUMBAI, October 23: The Industrial Development Bank of India (IDBI) has registered a 34 per cent growth in its net profit in the first half...

MUMBAI, October 23: The Industrial Development Bank of India (IDBI) has registered a 34 per cent growth in its net profit in the first half of 1997-98 at Rs 689 crore, up from Rs 514 crore in the same period of the last fiscal. The profit before tax — inclusive of capital gains to the tune of Rs 38 crore — during the first half at Rs 856 crore registered a 16.4 per cent growth.

This profit has been arrived at after bad and doubtful debts provisions and write-offs to the tune of Rs 130 crore as against Rs 100 crore provided for during the same period of the previous year. The audited accounts of IDBI for the six-month period shows a total income from operations (excluding capital gains on sale of investments) aggregating Rs 3452 crore, registering a growth of 20 per cent. Total expenditure at Rs 2504 crore increased by 18 per cent.

Meanwhile, in response to the credit policy, IDBI has decided to bring down the Medium Term Lending Rate (MTLR) from 14.5 per cent (exclusive of interest tax) to 13.5 per cent. With the interest band being retained at 3.5 per cent, interest rates on individual loans will now be fixed on the basis of risk perception between 13.5 per cent and 17 per cent.

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The Minimum Short Term Lending Rate (MSTLR) which will be applicable to short term working capital loans is fixed at 12.5 per cent. Interest rate on individual loans will be fixed within a band of 3.5 per cent over MSTLR depending on the risk perception in each case. The revised rates will be applicable to loans in respect of those agreements which are to be executed on or after October 24, 1997 and will remain effective during the currency of the loan.

During April-September 1997, the total assets of IDBI stood at Rs 53,908 crore compared to Rs 46,128 crore as at end of September 1996. The institution registered a 5.3 per cent growth in its disbursements at Rs 6245 crore (Rs 5930 crore) in the first half while disbursements went up by 39 per cent at at Rs 10,933 crore (Rs 7868 crore). The IDBI chief attributed the slow growth in disbursements to the tardy refinance and bill discounting business which was down by about Rs 500 crore in the first half.

Industry-wise, sanctions to power, telecom and ports amounted to Rs 4007 crore (37.1%) followed by chemicals and chemical products (12.9 %), basic metals (12 %), textiles (7.9 %) and cement (5%).