The IDBI Bank, struggling under the weight of huge bad loans, got a capital boost after insurance behemoth LIC took majority stake. The bank is now trying to chart a new turnaround path as the insurance arm and the banking outfit try to exploit synergies to improve the bank’s fortunes.
To begin with, IDBI Bank would be the bancassurance partner selling LIC policies through its branches, and manage cash and other premium receipts of LIC through its bank branches, the bank said in a statement about its turnaround strategy. “IDBI Bank is putting in place necessary business enablers to bring the convenience of banking and insurance services at one stop for all its customers.
These strategic initiatives will pave the way for improved operations and better financials, which, in turn, would lead to wealth maximisation for all its stakeholders, including LIC and Government of India,” IDBI Bank said.
Over long-term, the strategy would include having common investment strategy, use of each other’s real estate, commercial and residential space and resources, and rationalisation of common subsidiaries in mutual funds, life insurance. “With this strategic alliance, the bank stands to gain immensely as it will be able to augment its retail business, thereby de-risking its business portfolio and ensuring increasing of other income/operating profit, NIM and substantial increase in CASA,” the bank said.
The bank is also seeking to get an additional three-year term for its incumbent MD & CEO Rakesh Sharma.