In the second quarter, the country's largest financial institution has posted an even steeper fall in net profit of 40.23 per cent to Rs 205 crore from Rs 343 crore in the same period last year. IDBI's board met on Wednesday to approve the half yearly results.

The institution's disbursement has gone up modestly by 9.1 per cent from Rs 6,618 crore to Rs 7,218 crore during the period. The sanctions of assistance under all its schemes during April-September period has gone up marginally by 3.1 per cent from Rs 12,988 crore to Rs 13,395 crore.

"There are visible signs of improvement in the economy which will automatically get reflected in our performance in the coming days," IDBI chairman GP Gupta said.

According to him, demand for cement, petro-chemicals, steel, paper are on the rise which is reflected in the increase in product prices. "The downtrend seems to have bottomed out and there are clear signs of recovery in the core sectots of the economy," Gupta said.

The IDBI scrip on the BSE opened at Rs 49.8 and soon touched the day's high at Rs 50. But as the market weakened during the day, the scrip dipped to Rs 43.40--the lower cap on the bourse--but closed a notch higher at Rs 43.50.

IDBI's gross profit amounted to Rs 664 crore during the period against Rs 856 crore in the same period last year. The decline in gross profit is attributed to lower growth in income from operations and higher write offs/provisions coupled with an increase in interest expenses consequent upon redemption of low cost borrowings.

INSIGHT
Non-fund business falls short

The Q2 has been bad for IDBI. Not only are the year-on-year figures difficult to digest but the quarter-on-quarter earnings are also bad. The FI's net profit fell 35 per cent in Q2 compared to Q1. There has been no mention made of the extent of NPAs or the incremental provisioning made. There has been no provision made for standard assets yet. The foray into non-fund based businesses has also not yielded the desired results. In fact, other income is lower quarter on quarter.

-- Aaron Chaze