IDBI Bank has put on sale its remaining 2.5% stake in the Clearing Corporation of India (CCIL), according to a public notice. In the September quarter of FY18, the bank had sold a 10.03% stake in Small Industries Development Bank of India (SIDBI) and 2.5% in CCIL and made capital gains of Rs 1,266.45 crore and Rs 70.96 crore respectively. In the subsequent quarter, the bank fully exited from SIDBI, selling its residual 6.22% stake for Rs 616.2 crore.
In December, IDBI invited merchant bankers to execute the sale of its 1.5% stake in National Stock Exchange (NSE). It has also sold its entire 30% stake in NSDL E-governance Infrastructure and a 7% stake in National Securities Depository. It is in talks to exit IDBI Federal Life Insurance.
The sales are part of IDBI Bank’s strategy to monetise all non-core assets and exit non-banking businesses. On May 10, FE had reported that State Bank of India (SBI) is in the final stages of buying four floors at Mafatlal Centre at Mumbai’s Nariman Point from IDBI Bank in a deal valued close to Rs 170 crore. The bank has reportedly also sold its building in Bandra Kurla Complex (BKC) to the markets regulator Sebi for Rs 1,000 crore a few months ago.
In May 2017, the Reserve Bank of India (RBI) initiated prompt corrective action (PCA) against IDBI Bank, prompted by its high net non-performing assets (NPAs) and negative return on assets (RoA). In Q3FY18, the bank’s net NPA ratio stood at 16.02% while the RoA stood at -1.83%. In FY17, the RoA was -1.38%.
Under PCA, the bank faces restrictions on distributing dividends and remitting profits. That apart, the lender also faces curbs on expanding its branch network and raising management compensation as well as directors’ fees. It needs to maintain higher provisions as well.