The Hindu Business Line : IIBI to look for synergies with banks

INDUSTRIAL Investment Bank of India Ltd (IIBI) is likely to hold dialogue with commercial banks for synergising its expertise in developmental finance with other types of retail banking.

With this approach, IIBI expects to tide over the present financial crisis, according to its new Chairman, Mr Madhukar, who is also the Chairman and Managing Director of United Bank of India (UBI).

Mr Madhukar was talking to reporters after attending an interactive session on `Economic outlook - post-Union Budget, post-Iraq war' organised by the Bengal Chamber of Commerce & Industry on Thursday.

He was "bullish'' on IIBI and was confident that his UBI experience would help him turn around the financial institution.

He admitted that expanding the lending business would not be easy for IIBI as the size of its balance sheet was quite small. Moreover, it suffered from a huge NPA (non-performing asset) base, which was 30 per cent of its total assets. "We may adopt a bolder NPA settlement policy so that the total cost of the NPA comes down,'' he said.

IIBI officials will make a detailed presentation to Mr Madhukar about the organisation in a couple of days. "Until I see the overall picture, it will be difficult for me to take any decisions on IIBI,'' he said.

He said that IIBI should increase its non-interest income and for that it may have to start selling insurance products through the bancassurance route.

However, he said, IIBI would not seek fresh funds from the Union Government. "Raising Tier-II capital is also out of the question. Who will give us the money?'' he asked.

Earlier, addressing the seminar, he noted that the Iraq war had created a new opening for the global economy as well as the Indian economy. He was confident that oil prices would decline in the near future.

Mr Kishalay Pathak, an economist attached with Standard Chartered Bank, hoped that oil prices would hover in the $22-25 per barrel range. In the post-war scenario, consumer spending in the US would increase and that would lead to economic growth in that country.

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