IDBI set to get Rs 9,000-cr capital infusion from Centre

New Delhi: The government has approved a capital infusion of Rs 9,000 crores into IDBI Bank in order to increase the lender’s capital base. Information and Broadcasting Minister Prakash Javadekar told the media that the Union Cabinet has cleared the recapitalisation of IDBI Bank by both the government and LIC.

Out of the promised Rs 9,000 crores, the government will pour Rs 4,557 crore as one-time re-capitalisation, Javadekar said. While LIC will infuse the rest — Rs 4,700 crores.

IDBI reported net loss of Rs 3,800 cr in Q1

The IDBI Bank had reported a net loss of Rs 3,800 crores in the first quarter was put on credit watch by S&P Global last month. Even though the bank’s asset quality improved marginally in the June quarter on a year-on-year basis, but it continued to be a matter of concern. IDBI’s gross non-performing assets (NPAs) ratio or bad loans, as a percentage of gross advances, stood at 29.12 percent against 30.78 percent in Q1FY19 while net NPA fell to around 8 percent from 18.76 percent in the year-ago period.

The backdrop

The news comes just a week after Finance Minister Nirmala Sitharaman announced that the government was planning to infuse Rs 70,000 crores into public sector banks. Sources said that the infusion is aimed at helping IDBI Bank tackle the financial crisis it is mired in. The bank has been in the red for the last 11 quarters and was under RBI’s prompt corrective action framework.