For a buyer, IDBI will have pleasant surprises: Rakesh Sharma

economictimes.indiatimes.com:

IDBI Bank was at the heart of Indian industrialization pre-2000 but collapsed under its own weight. After a turbulent phase, it is being readied for privatisation as a turnaround story. The bank's chief executive Rakesh Sharma tells Joel Rebello and MC Govardhana Rangan that the transformation journey has burnished the allure of the lender that, at one point in time, had the highest bad-loan ratio relative to the funds advanced.

Edited excerpts:IDBI Bank of today is different from what it was when you entered nearly five years ago. What is the change?IDBI was a DFI (development finance institution) so the concentration was on infrastructure, power and corporates. When AQR (asset quality review) started all the banks were hit, but we were the worst hit because corporate loans were quite high.

When I came in, the gross bad loans were 32% and the net bad loans were around 16%. And defaults were rising. Since major advances were to infrastructure the dependence on costly bulk deposits was also high.

Because of the losses the staff was demotivated. Today, the net NPA is 0.44% and the gross NPA is at 5.05%. My capital adequacy now is more than 20%.

We started making profits from March 2020 and my return on assets is 1.49%.How did this change come about? First, we had to arrest these slippages. We gave full support to the NPA management group. The bank was put under the PCA (Prompt Corrective Action) which came as a blessing in disguise because we were stopped from giving corporate loans.

So, we started developing the retail business. We substituted bulk deposits with low-cost ones, reducing the cost from 5.41% to 3.71%. When I came in ₹22,000 crore was lying in RIDF (Rural Infrastructure Development Fund) deposits which earned