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G. Madhan

IDBI's `Suvidha' fixed deposit scheme is open for investment. Income from the deposits is eligible for tax benefit u/s 80L of the IT Act. Senior citizens also get an additional interest rate of 0.5 per cent. An investment up to one-year is acceptable, but not beyond that considering the company's risk profile and the lock-in period of high initial investment for the quarterly and monthly options.

Schemes and features: Suvidha offers cumulative and non-cumulative options. Under the non-cumulative scheme, the interest is paid quarterly, half-yearly and annually. However, the minimum deposit amount for each of the option varies (see table for rates and deposit amount). The interest rate for cumulative scheme is same as that of the non-cumulative annual scheme.

Business prospects: The government-owned IDBI finances medium and long-term projects. The company has structured various products such as equipment finance, asset credit, corporate loans, direct discounting and working capital loans to finance acquisition of equipments, capital assets, to meet capital expenditure and/or incremental long-term working capital requirements. It also offers structured products such as lines of credit to meet the funding requirements for execution of turnkey contracts.

IDBI has initiated move to transform itself into a bank after the financial institution began to show signs of developing long-term financial problems of its own in the absence of it ability to raise funds at competitive rates for lending. The company's term financing business also had come under severe pressure over the past couple of years on account of absence of fundable new projects. However, given the thrust provided for the infrastructure projects in the budget, the company has good prospects for growth.

Financials: For the financial year 2002-03, IDBI disbursed Rs 3,892 crore against Rs 11,158 crore in the corresponding previous year.

The drop in the volumes of operations during the year reflects the prevalent subdued industrial investment climate and a deliberate corporate strategy to direct fresh assistance only to prime-rated clients.

The company's net income from operations during the period fell by six per cent to Rs 7,337 crore. The net profit during the period also dropped by 5.4 per cent to Rs 401 crore.

The net profit margin for the year ending March 2003 stood at 5.5 per cent against 5.4 per cent the previous year. The capital adequacy ratio was 18.9 per cent at end-March 2003, well above the RBI norm. However, substandard assets and doubtful assets together constitute 14.2 per cent of the total assets, up from the previous year's 11.7 per cent.

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