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June 1, 2002 | 1310 IST
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IDBI makes Rs 25 billion provision

BS Banking Bureau

Industrial Development Bank of India has followed in the footsteps of ICICI in that it has made an accelerated provisioning of Rs 25 billion for the year ended March 31, bringing down its level of non-performing assets to less than 12 per cent of its total assets.

The institution has made a total provisioning of Rs 32.73 billion, which includes a "normal" provisioning of Rs 7.73 billion and has promised to bring down its NPA level to below 5 per cent by March 2003.

IDBI chairman and managing director P P Vora said: "The previous year had been a year of consolidation and cleaning up. An accelerated provisioning of Rs 25 billion was made, in addition to the Reserve Bank of India requirements. This is the highest ever provision made by IDBI. With this, IDBI has brought down its non-performing assets to 11.69 per cent in 2001-02 compared to 14.8 per cent in the previous year."

The provisions as a percentage of the NPAs have now gone up to 54 per cent, compared to 27 per cent, last year.

Replying to reporters' questions whether IDBI would continue with the accelerated provisioning this year too, Vora said: "The capital adequacy ratio of IDBI is at 17.86 per cent. This is much higher than that of others, which is around the 11 per cent mark. We can still provide for around Rs 35 billion, which would bring the CAR down to around 11 per cent. We would like to bring down the net NPAs down to less than 5 per cent by March 2003."

"IDBI has made a provisioning of around Rs 57 billion in the last two years so that the balance sheet is healthy," he added.

During the year, IDBI had received bonds of Rs 21.30 billion from the government in lieu of the earlier bonds of the RBI and government of India. These bonds qualify as Tier-I capital.

These fresh convertible bonds have a tenure of 20 years and the proceeds have been used for cleaning up the balance sheet, Vora said at the press conference.

IDBI's net NPAs were put at Rs 65 billion at the end of March 2002, compared to Rs 83.70 billion at the end of the previous year.

The gross NPAs for 2001-02 were at Rs 117.68 billion as against Rs 108.79 billion in the previous year. The recoveries during the period were at Rs 5.35 billion.

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