The bank, now a subsidiary of Life Insurance Corporation of India, is under Prompt Corrective Action (PCA) regime due to a high level of net non performing assets. PCA puts restrictions on extending big ticket loans and requires banks
to keep a tight control on expenses.
IDBI reported a divergence in the gross NPAs assessed by itself and those assessed by the Reserve Bank of India (RBI) at about Rs 4,255 crore for FY18. The bank has made a provision of Rs 4,030 crore for divergence.
The bank's gross NPAs declined to Rs 50,027 crore (27.47 per cent) in March 2019 from Rs 55,588 crore (27.95 per cent) at end of March 2018. The net NPAs almost halved to Rs 14,837 crore (10.11 per cent) in March 2019 from Rs 28,665 crore (16.69 per cent) in March 2018.
The provisions for NPAs stood at Rs 7,233 crore in Q4FY19 as against Rs 10,773 crore for Q4FY18.
Rakesh Sharma, managing director and chief executive said that the bank expectects to bring down its net NPAs below 6 per cent by September 2019. Banks
has guided for recoveries of Rs 13,000 crore FY20.
Sharma added that the lender is looking to report profits in the third quarter ending December 31, 2019, and meet all norms for PCA by March 2020. The bank will be in position to exit PCA by March 2020, he added.
The bank expects to raise equity capital of upto Rs 6,500 crore in FY20 through instruments like qualified institutional placement and rights issues. The bank also has the approval to raise Rs 2,500-3,000 crore through tier II, Sharma said.
The proceeds from monetizing investments are expected to be Rs 1,500-2,000 crore. This includes the sale of stake in IDBI Federal Life Insurance, IDBI Mutual Fund and some holding in NSDL.
The bank's capital adequacy ratio stood at 11.58 per cent with Common Equity Tier I of 8.91 per cent at end of March 2019.