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I AARTI SONI student of mulund college of commerce, S.N. road, Mulund (w) 400 080 studying in MCOM- 1 here by declare that I have completed the project on


During the Academic year 2012-2013. The information submitted is true & original to best of my knowledge.

Date of submission: 12-10-2012 Place: Mulund

Signature of Student

I Prof. ANURADHA & Prof. RANE here by certify that AARTI SONI of Mulund College of Commerce, S.N road, Mulund (w). Mumbai 400 080 of MCOM 1 (Advance Acccountancy) has completed His\ Her Project on OVERVIEW & FINANCIAL RRPORT OF IDBI. During the Academic year 2012-2013 The information submitted is true & original to the best of my knowledge. Signature of Project Guide

Signature of Principal

Signature of Co-ordinator (A.P. KULKARNI)

Signature of External Examiner

"Accomplishment of any task necessarily depends upon the willingness and enthusiastic contribution of time and energy of many people." I take this humble opportunity to express my special thanks and portray my deep sense of gratitude to Prof. & Prof. whose invaluable guidance and supervision in the project infused in me great inspiration and confidence in making this survey in right earnest. His masterly guidance from time to time made the study interesting and meaningful. They were always there for our help and doing away all the difficulties and confusions that arose during the project period. He also helped me to understand what was actually required from the project and what was needed to be done. I would like to thank our respondents for their kind response and their precious time they provided me to carry our survey based on the data provided by them. At last I would like to pay my word of thanks to my family members, all my teachers and my friends who have indebted me by supporting and encouraging me to go on with the project easily.


1. To understand the corporate history and strategy of IDBI Ltd. 2. To understand the overall business strategies adopted by IDBI Ltd. for the loan against securities business. 3. To make a comparative analysis of the product and business strategies of IDBI Ltd. with respect to various private and public sector banks. 4. To formulate the unique and desired corrective measures and innovation to increase market share and enhance the brand value of IDBI Ltd. 5. To analyze the service quality in the branches of IDBI Bank.

Executive Summary

IDBI was established in 1964 as a wholly owned subsidiary of the Reserve Bank of India (RBI). In February 1976 it was de-linked from the Reserve Bank and its entire capital was transferred to the Central Government. In March 1994 the IDBI Act was amended to empower the government provided the government holding does not fall below 51%.


The project report titled IDBI Ltd. has been prepared mainly on the basis of secondary data.

Secondary data is the data which is made available and considered as the starting point for the report. This data can be obtained both internally as well as externally. The following sources were the basis of this project report:-

Internal Sources
The main internal source has been the library of our institute i.e. MAIMS. IDBI product manual Annual report of IDBI Journals of various banks

External Sources
Websites Magazines Newspapers


Although the project has been worked out at its best yet there are some limitations, which cannot be overlooked. Had these limitations been overcome, the findings would be accurate. Some of these limitations can be discussed as under:

Time constraint
Time was really a limiting factoring the project. It is really difficult to work out such a project in less time.

Data constraint
All the data that has been collected for this project, has been taken from secondary sources like websites, magazines, newspapers and book. And such data may be not be completely accurate and reliable.

Inexperience of researcher
Inexperience of researcher might also have resulted in inaccuracies.

Chapter no. Topic Pg no.

1 2 3


5 6 7 8 Concusion


Introduction Industrial development bank of India:The industrial development bank of India (IDBI) was established in 1964 by parliament as wholly owned subsidiary of reserve bank of India. In 1976, the banks ownership was transferred to the government of India. It was accorded the status of principal financial institution for coordinating the working of institutions at national and state levels engaged in financing, promoting, and developing industries. IDBI has provided assistance to development related projects and contributed to building up substantial capacities in all major industries in India. IDBI has directly or indirectly assisted all companies that are presently reckoned as major corporates in the country. It has played a dominant role in balanced industrial development. IDBI set up the small industries development bank of India (SIDBI) as wholly owned subsidiary to cater to specific the needs of the small-scale sector. IDBI has engineered the development of capital market through helping in setting up of the securities exchange board of India(SEBI), National stock exchange of India limited(NSE), credit analysis and research limited(CARE), stock holding corporation of India limited(SHCIL), investor services of India limited(ISIL), national securities depository limited(NSDL), and clearing corporation of India limited(CCIL) In 1992, IDBI accessed the domestic retail debt market for the first time by issuing innovative bonds known as the deep discount bonds. These new bonds became highly popular with the Indian investor. In 1994, IDBI Act was amended to permit public ownership up to 49 per cent. In July 1995, it raised over Rs 20 billion in its first initial public (IPO) of equity, thereby

reducing the government stake to 72.14 per cent. In June 2000, a part of government shareholding was converted to preference capital. This capital was redeemed in March 2001, which led to a reduction in government stake. The government stake currently is 51 per cent. In august 2000, IDBI became the first all India financial institution to obtain ISO 9002: 1994 certification for its treasury operations. It also became the first organization in the Indian financial sector to obtain ISO 9001:2000 certification for its forex services. IDBI is one of the All India Development Bank in India. In addition, it is the apex banking institution in the field of long term industrial finance and functions as the principal financial institution for coordinating the functions and activities of all India term lending institutions and to some extent the public sector banks. The merger of IDBI Bank with the IDBI Ltd. in the year 2004 had made the IDBI Ltd. as the public sector bank (PSU) with the Government stake holding of 51.4% and the new company has been incorporated on Sept.27, 2004 and the Registrar of the companies, Mumbai issued the certificate for commencement of business to IDBI Ltd. on Sept.28, 2004. Consequently, the IDBI formally entered the portals of banking business as IDBIL (Industrial Development Bank Of India Limited) from Oct.1, 2004 over and above the business currently being transacted.

July 1964: Set up under an Act of Parliament as a wholly owned

subsidiary of Reserve Bank of India. February 1976: Ownership transferred to Government of India.

Designated Principal Financial Institution for coordinating the working of institutions at national and State levels engaged in financing, promoting and developing industry. March 1982: International Finance Division of IDBI transferred

to Export-Import Bank of India, established as a wholly owned corporation of Government of India, under an Act of Parliament. April 1990: Set up Small Industries Development Bank of India (SIDBI) under SIDBI Act as a wholly owned subsidiary to cater to specific needs of small-scale sector. In terms of an amendment to SIDBI Act in September 2000, IDBI divested 51% of its shareholding in SIDBI in favour of banks and other institutions in the first phase. IDBI has subsequently divested 79.13% of its stake in its erstwhile subsidiary to date. January 1992: Accessed domestic retail debt market for the first time with innovative Deep Discount Bonds; registered path-breaking success. December 1993: Set up IDBI Capital Market Services Ltd. as a wholly owned subsidiary to offer a broad range of financial services, including Bond Trading, Equity Broking, Client Asset Management and Depository Services. IDBI Capital is currently a leading Primary Dealer in the country. September 1994: Set up IDBI Bank Ltd. in association with SIDBI as a private

sector commercial bank subsidiary, a sequel to RBI's policy of opening up domestic banking sector to private participation as part of overall financial sector reforms. October 1994: IDBI Act amended to permit public ownership up to 49%.

July 1995: Made Initial Public Offer of Equity and raised over Rs.2000 crore,

thereby reducing Government stake to 72.14%. March 2000: Entered into a JV agreement with Principal Financial Group, USA for participation in equity and management of IDBI Investment Management Company Ltd., erstwhile a 100% subsidiary. IDBI divested its entire shareholding in its asset management venture in March 2003 as part of overall corporate strategy. March 2000: Set up IDBI Intech Ltd. as a wholly owned subsidiary to undertake IT-related activities. June 2000: A part of Government shareholding converted to preference capital, since redeemed in March 2001; Government stake currently 58.47%. August 2000: Became the first All-India Financial Institution to obtain ISO 9002:1994 Certification for its treasury operations. Also became the first organization in Indian financial sector to obtain ISO 9001:2000 Certification for its forex services. March 2001: Set up IDBI Trusteeship Services Ltd. to provide technology-driven information and professional services to subscribers and issuers of debentures. February 2002: Associated with select banks/institutions in setting up Asset Reconstruction Company (India) Limited (ARCIL), which will be involved with the strategic management of non-performing and stressed assets of Financial Institutions and Banks. September 2003: IDBI acquired the entire shareholding of Tata Finance Limited in Tata Home finance Ltd, signaling IDBI's foray into the retail finance sector. The housing finance subsidiary has since been renamed 'IDBI Home finance Limited'.

December 2003: On December 16, 2003, the Parliament approved The Industrial Development Bank (Transfer of Undertaking and Repeal Bill) 2002 to repeal IDBI Act 1964. The President's assent for the same was obtained on December 30, 2003. The Repeal Act is aimed at bringing IDBI under the Companies Act for investing it with the requisite operational flexibility to undertake commercial banking business under the Banking Regulation Act 1949 in addition to the business carried on and transacted by it under the IDBI Act, 1964. July 2004: The Industrial Development Bank (Transfer of Undertaking and Repeal) Act 2003 came into force from July 2, 2004. July 2004: The Boards of IDBI and IDBI Bank Ltd. take in-principle decision regarding merger of IDBI Bank Ltd. with proposed Industrial Development Bank of India Ltd. in their respective meetings on July 29, 2004. September 2004: The Trust Deed for Stressed Assets Stabilization Fund (SASF) executed by its Trustees on September 24, 2004 and the first meeting of the Trustees was held on September 27, 2004. September 2004: The new entity "Industrial Development Bank of India" was incorporated on September 27, 2004 and the Registrar of Companies issued Certificate of commencement of business on September 28, 2004. September 2004: Notification issued by Ministry of Finance specifying SASF as a financial institution under Section 2(h)(ii) of Recovery of Debts due to Banks & Financial Institutions Act, 1993.

September 2004: Notification issued by Ministry of Finance on September 29, 2004 for issue of non-interest bearing GOI IDBI Special Security, 2024, aggregating Rs.9000 crore, of 20-year tenure. September 2004: Notification for appointed day as October 1, 2004, issued by Ministry of Finance on September 29, 2004. September 2004: RBI issues notification for inclusion of Industrial Development Bank of India Ltd. in Schedule II of RBI Act, 1934 on September 30, 2004. October 2004: Appointed day - October 01, 2004 - Transfer of undertaking of IDBI to IDBI Ltd. IDBI Ltd. commences operations as a banking company. IDBI Act, 1964 stands repealed. January 2005: The Board of Directors of IDBI Ltd., at its meeting held on January 20, 2005, approved the Scheme of Amalgamation, envisaging merging of IDBI Bank Ltd. with IDBI Ltd. Pursuant to the scheme approved by the Boards of both the banks, IDBI Ltd. will issue 100 equity shares for 142 equity shares held by shareholders in IDBI Bank Ltd. EGM has been convened on February 23, 2005 for seeking shareholder approval for the scheme.


History Of IDBI:-

The genesis of Industrial Development Bank Of India Ltd can be traced to the establishment of the IDBI, its predecessor entity, in 1964, by an Act of Parliament to provide credit and other facilities for the development of industry.

IDBIs charter was later broad-based to also encompass the responsibilities of principal financial institution for coordinating the working of National and State level institutions engaged in financing, promoting and developing industry.

IDBI was established in 1964 as a wholly owned subsidiary of the Reserve Bank of India (RBI). In February 1976 it was de-linked from the Reserve Bank and its entire capital was transferred to the Central Government. In March 1994 the IDBI Act was amended to empower the government provided the government holding does not fall below 51%. Consequently, the Bank made its first public issue of equity in July 1995, which was the largest equity offering in the Indian Stock Market till then. The majority of its shares are still held with Central Government though the percentage holding of Government has declined to 58.47% as at the end of March 2002. The authorized capital of Erstwhile IDBI stood at Rs.1500 crores in conformity with the provision of Banking Regulation Act. The paid up capital of the company is at Rs.653 crores. During the four decades of its existence, IDBI has been instrumental not only in establishing a well developed, diversified and efficient industrial and institutional structure but also adding a qualitative dimension to the process of industrial development in the country.

Cumulative assistance sanctioned and disbursed by IDBI, since inception up to the end September 2004 aggregated around Rs.22, 30,000 Crores and Rs. 1,78,000 Crores respectively. IDBIs asset base stood in the vicinity of Rs. 63,850 Crores at the end of September 2004.

Institution Building
IDBI has been actively involved in the development of a robust institutional framework for the domestic financial sector. It played a significant role in the setting up of several Financial Institutions viz. Export-Import Bank of India (EXIM Bank); Small Industries Development Bank of India (SIDBI); North Eastern Development Finance Corporation Ltd. (NEDFi); and the Asset Reconstruction Company (India) Ltd. (ARCIL). IDBI also participated in the setting up of various capital market-related institutions viz. Securities & Exchange Board of India (SEBI); National Stock Exchange of India Ltd. (NSE); Stock Holding Corporation of India Ltd. (SHCIL); Credit Analysis & Research Ltd. (CARE); National Securities Depository Ltd. (NSDL); IDBI Trusteeship Services Ltd.(ITSL) and Clearing Corporation Of India Limited (CCIL). IDBI played a key role in the development of the Jawaharlal Nehru Institute of Development Banking (JNIDB) and the Entrepreneurship Development Institute of India (EDII) as training institutes.

IDBI has also been associated with the Entrepreneurship Development in the industrially less developed states of India. Thus it has performed the role of the institution builder.

Subsidiaries of IDBI
After the de-linking of Small Industries Development Bank of India from the IDBI with effect from March 27,2000. IDBI has the following three subsidiaries, viz IDBI Bank Ltd. (commercial bank) (IDBI Ltd.'s shareholding: 55.38%); IDBI Capital Market Services Ltd. (financial services/ primary dealership company) (IDBI Ltd's shareholding: 100%) and IDBI Home finance Ltd. (housing finance company) (IDBI Ltd's shareholding:100%).


(%) Government Employees Public HUF Bodies Corporate Banks FIIs SFCs Fis MFs OCBs Trusts Insurance Companies NRIs Others Total

58.47 0.09 13.90 0.16 3.62 5.06 8.29 0.03 0.67 2.52 0.07 0.06 5.76 0.72 0.58 100.00

IDBI Bank Ltd.

IDBI Bank Ltd. is a commercial bank, set up by IDBI and SIDBI in September 1994.

It provides the complete range of banking facilities. During 1998-99, IDBI Bank Ltd. issued 4 crores-equity shares of Rs.10 each at a premium of Rs.8 per share to the public. Thus IDBIs share in the equity capital of the bank has fallen from 80% to 57%. SIDBI also holds shares in the IDBI Bank Ltd. The IDBI Bank Ltd. has a robust business model which focuses on careful choice of market segments having revenue potential, expansion of products suite for supporting future growth and profitability, leveraging technology infrastructure for enhanced customer services and strong risk management committed to high quality assets and earnings.

IDBI Home Finance Ltd.

In order to make a foray into retail financing, the erstwhile IDBI, in September 2003, acquired the entire shareholding of Tata Finance Ltd. in Tata Home Finance Ltd., at par for a total consideration of Rs.49.98 crore. The company has since been renamed as "IDBI Home Finance Limited After becoming a subsidiary of IDBI Ltd., IHFL obtained an A1+ rating (highest shortterm rating) from ICRA, which facilitated the raising of funds at lower rates. IHFL has implemented a Total Home Loan Solutions (THLS) system with connectivity through leased lines with all its 16 branches. The system is scalable and forms the foundation for future business growth.

Chapter No. 3 Functions of IDBI

Functions of IDBI:Besides providing assistance to industries directly, IDBI also provides assistance to industries through other financial institutions and banks. Thus, the assistance provided by IDBI falls in two categories, viz. 1 2 Direct finance to large and medium enterprises and Indirect finance through other financial institutions.

Functions Direct finance - Project Finance - Underwriting & subscription to shares & debentures - Guarantees for deferred - Payments & Loans - Bills Discounting - Equipment Finance Scheme - Film Financing Indirect Finance - Refinance of Term Loans - Rediscounting of bills - Support to shares & Bonds of other institutions - Rehabilitation Financing

3.2 Future Prospects

Although IDBI Ltd. commenced its foray into banking on a standalone basis, the merger of IDBI Bank into IDBI Ltd., a mutually gainful proposition with positive implications for

all stakeholders and clients in terms of operational synergies, logistics advantages, cost efficiencies and rationalization of business processes, is expected to be in place before the end of the current financial year ended March 31, 2005. The Board of Directors of both IDBI and IDBI Bank accorded in-principle approval for the same on July 29, 2004. The Board of IDBI Ltd. (IDBI's successor entity) ratified the decision regarding merger of IDBI Bank with IDBI Ltd. at the meeting held on October 1, 2004. The various preparatory steps leading up to the proposed merger are already under way. The Board of Directors of IDBI Limited, at its meeting held on January 20, 2005, approved the Scheme of Amalgamation, envisaging merger of IDBI Bank Ltd with IDBI Ltd. Pursuant to the Scheme approved by the Boards of both the banks, IDBI Ltd. will issue 100 equity shares for 142 equity shares held by the shareholders in IDBI Bank Ltd. IDBI Ltd. will transfer a portion of its current shareholding in IDBI Bank Ltd., amounting to 2.5% of the merged entity's share capital, to a Special Purpose Vehicle (SPV) and extinguish the balance shares currently held by it in the Bank. Post-merger, the Central Government's shareholding in IDBI Ltd. will be at 51.4%. The appointed date for the merger has been fixed as October 1, 2004. The Scheme of Amalgamation would need to be approved by the shareholders of each of the banking companies viz. IDBI Ltd. and IDBI Bank Ltd. and will become effective on subsequent receipt of final approval of the Reserve Bank Of India. The merger of IDBI Bank with IDBI Ltd. seeks to consolidate businesses across the value chain. The merger will provide a win-win situation for both the institutions and also enable the merged entity to provide an array of customer-friendly services to its existing and prospective clients. In a physical sense, this would enable IDBI to complete the

integration across the board. In a competitive sense, the merger would create a firm foundation for IDBI to compete with other banks, supported by strong operational synergies. The merger stood IDBI Ltd. in good stead in its quest for market share in the intensely competitive financial system and facilitates its passage to the upper echelons of the emerging financial architecture in India. The proposed business model underpinning the new organization is one of Strategic Business Units (SBUs), with one SBU focusing on development finance, with accent on corporate finance, while the other would focus on commercial banking. There could be more SBUs, depending on the space that IDBI Ltd. decides to appropriate for itself going forward. The transformation into a bank comes on the heels of the establishment of the Stressed Assets Stabilization Fund (SASF), domiciled in a Special Purpose Vehicle set up by the Central Government in the form of an Asset Management Trust, to which stressed assets amounting to Rs. 9000 crore have been transferred. The above initiative would go a long way in purging IDBI's legacy portfolio of Non-Performing Assets. The Central Government has accorded SASF the status of a deemed 'financial institution' to enable it to press a claim for disposal of assets in its portfolio under the aegis of Debt Recovery Tribunals (DRTs), wherever deemed necessary. The off-balance sheet, cash-neutral proposition is expected to trigger a concatenation of benefits: a clean and stronger balance-sheet, consequential positive implication on the organization rating that would translate into more cost-effective borrowing, both domestically and abroad, and overall upgrade in the organizations brand equity that would suitably reflect in its stock valuations, which is already discernible.

IDBI Ltd. would continue to provide the extant products and services as part of its development finance role even as a banking company. The Union Budget 2004-05, presented on July 8, 2004, spelt out a number of positives for financial sector participants, including IDBI. The focused pursuit of infrastructure development through pooled investment of Rs. 40,000 crore by the proposed Inter-Institutional Group (IIG), comprising IDBI Ltd. and select FIs and banks, is expected to stimulate the Bank's business volumes. Further, the reform of the SARFAESI Act 2002, making it more equitable for both lenders and borrowers (in the light of the Supreme Court pronouncements on the subject and apprehension of potential dilution of creditors' rights) and related enabling amendments in the Debt Recovery Act, 1993, are expected to strengthen the legal framework for facilitating expeditious recovery of the organizations dues from delinquent accounts. In addition to extant services, the new entity would also provide an array of wholesale and retail banking products, designed to suit the specific needs/cash-flow requirements of corporate and individuals. In particular, the Bank would leverage the strong corporate relationships built up by the erstwhile IDBI over the years to offer customized and total financial solutions for all corporate business needs, single-window appraisal for term loans and working capital finance, strategic advisory and "hand-holding" support at the implementation phase of projects, among others. IDBI's transformation into a commercial bank also provides a potential gateway to lowcost banking deposits like Current and Savings Bank Deposits. This would have a positive impact on the Bank's overall cost of funds and facilitate lending at more competitive rates to its clients. The new entity would, in due course, offer various retail liability products,

leveraging upon its present relationship with retail investors under its existing Suvidha/ Flexibond schemes. IDBI Ltd. would aggressively leverage its strengths - both within and without - to fashion an enduring improvement in the Bank's performance, quality of its portfolio and its relative standing in the emerging financial infrastructure. Systems and procedures have already been streamlined to facilitate the process while the hard and soft infrastructure has been readied to address the deliverables of the new organization.. Going forward, IDBI Ltd. seeks to emerge as a top-drawer commercial bank, providing innovative financial and banking solutions for corporate and individuals and a name to reckon with in the emerging configuration of institutional finance, both at home and abroad, capitalizing on its intimate knowledge of Indian industry and client requirements and large retail base on the liability side in addition to the significant benefits expected to accrue from the ensuing merger of IDBI Bank with IDBI Ltd. The Bank has set a target of opening 500 branches and 500 ATMs by 2008. Idbi Ltd. currently has 129 branches and 334 ATMs. It expects to grow 25% in business value for the next three years. With the inauguration of main branch on Chapel Road, IDBI Ltd. now has three branches at Hyderabad. Referring to the merger of IDBI Bank with IDBI, the merger has positive implications for all stakeholders and clients of these two entities from the viewpoint of operational synergies.

CHAPTER NO. 4 PRODUCTS AND SERVICES Introduction To The Products And Services

In order to cater to the diverse and customized needs of its corporate clients, IDBI Ltd. has structured suitable products like equipment finance, asset credit, corporate loan, working capital loan and bills discounting to variously finance acquisition of equipment and capital assets, besides meeting capital expenditure and/or incremental long-term working capital requirements. It also offers structured products like lines of credit to meet the funding requirements for execution of turnkey contracts. Besides, IDBI Ltd. provides a wide array of fee-based services.

IDBI Ltd. also provides indirect financial assistance through refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment term. The Bank has a well-diversified wholesale resource base, which includes banks, PSUs, corporate, provident/pension funds, mutual funds, trusts and multilateral institutions. The sizeable domestic retail segment is being tapped through innovatively packaged offerings of unsecured bonds, under the brand-name 'Flexi-bonds', at periodic intervals throughout the year as well as through competitively priced Fixed Deposits of one year and above under the 'IDBI Suvidha' brand. The principal instruments of Rupee funds from the wholesale market are Omni Bonds (private placement and on-tap), Certificates of Deposit, Term Money Bonds, IDBI Corporate Deposits and Commercial Paper.

IDBI's transformation into a commercial bank also provides a potential gateway to lowcost banking deposits like Current and Savings Bank Deposits.

The new entity would, in due course, offer various retail liability products, leveraging upon its present relationship with retail investors under its existing Suvidha /Flexi bond schemes.
IDBI Ltd - Role In Primary Market

1 2 3

Acting as collection Banker. Funding IPOS. Rendering Depository Services.

IDBI Ltd. - Role In Secondary Market

1 2 3 4

Depository services to investors. Helping/Guiding investors to invest in Mutual Funds. CSGL Account to investors who deal in Government securities. Providing Banking services to investors at very competitive price.

In Short, the following are the categories: 1 2 3 4 5 Direct Finance Indirect Finance Corporate Banking Retail Banking Treasury Products

Direct Finance
Project Finance IDBI provide long-term finance for new projects, expansion, diversification and
modernization of existing projects. Project finance is provided by the way of: -

i. Term loans in Indian rupees and foreign currencies. ii. Underwriting. iii. Direct subscription to equity capital. iv. Deferred payment guarantees.

1. Guarantees For Deferred Payments And Loans

It includes the following categories: 1. Corporate Loans Corporate loans are provided in Indian and foreign currencies to financially sound companies with net worth of not less than Rs.10 crore and having been in commercial operation for 5 years and making profits consistently for last 3 years. Such loans are granted to finance capital expenditure and long term working capital. Assistance is provided from a minimum of Rs.5 crore up to 70% of the cost of capital goods or raw materials, components, etc., to be purchased. Promoters contribution must be 30% of the cost of capital goods/ raw materials, components to be purchased.

2. Working Capital Loans Such loans are provided to meet the loan component of working capital finance required by the companies already assisted by IDBI with net worth of not less than Rs. 15 crores. Assistance is provided up to 805 of the working capital gap with the minimum of Rs.2 crores. These loans are repayable over a period of 12 to 18 months, with roll over facility at the discretion of IDBI. Other terms are debt equity ratio not more than 3:1, Current ratio not less than 1.25:1 and Interest coverage not less than 2:1.

Bills Discounting
IDBI directly discounts the bills of exchange drawn by financially sound companies, which have been in operation for at least 3 years and have not defaulted to financial institutions, in connection with sale of machinery Equipment. IDBI fixes annual limit for discounting of bills, which are repayable over a period of 2 to 7 years. Assistance is provided up to 100% of the total value (including insurance, taxes and freight). IDBI requires security in the form of bank guarantee co-acceptance by a bank.

Equipment Finance
Equipment finance is also provided in Indian and foreign currencies for acquiring specific machinery/ equipment. The eligible borrowing firm must be financially sound company and should have been in operation for at least 5 years. It should have earned profits during the last 3 years and must have dividend paying capacity of not less than 2 years. The net worth of the company must be above Rs.5 crores. Assistance is provided to the extent of 70% of the cost of equipment plus taxes/ duties, transportation and installation charges. The amount of loan ranges between Rs.3 crores and Rs.25 crores. Loan is repaid over 6 tears including moratorium. Management fee is charged @ 1.05% on the loan amount.

Film Financing
Objective is to provide finance for production of feature films as defined under the Cinematograph (Certification) Rules, 1983. Advertisement films, short films, documentaries, etc. are not eligible for financing.

The eligible borrowing concern should be a corporate entity, promoted by reputed producers, backed by established directors & other technicians and possessing satisfactory track record. In case the entity is recently corporative, track record of the main promoter(s) is considered. The extent of assistance should be : 1 2 Not less than Rs.2 crore Not exceeding 50% of the estimated cost of the film.

Promoters contribution is not less than 30% of the estimated cost of the film. A part of the equity contribution (not exceeding 20% of th0e estimated cost of the film) may be raised in the form of advances from distributors against sale of territories, music/video rights, etc.

Indirect Finance
Re- Finance Of Term Loans
Objective is to finance medium scale industries. IDBI provides: i. Line of Credit (LOC) to all SFCs/SIDCs ii. Refinance to banks only in States of Bihar, Himachal Pradesh, Jammu & Kashmir, Orissa and States in the North East. The eligible borrowing concerns should be: i. Refinance of loans or advances granted by SFCs / SIDCs / SIICs, Financial Institution, Banks etc. ii. Should not be SSI iii. Cost of project not to exceed Rs. 12 crore under LOC scheme. iv. Proposals meeting the norms and parameters of Refinance Scheme Promoters contribution is @ 25% of project cost and the up front fee is @ 1% on each disbursement under LOC. The repayment period include: i. LOC: Maximum 8 years

ii. Refinance: Maximum -10 years and Normal repayment period: 3-10 years

Re-Discounting Of Bills
Objective is to cover or promote sale of indigenous machinery / equipment. The eligibility includes the bills / promissory notes made, drawn, accepted or endorsed by any manufacturer, user or any person selling capital goods. The extent of assistance is the minimum amount of rediscounting of bills/promissory notes is fixed at Rs.10, 000 and 100% of value of invoice. The repayment period includes the minimum and maximum deferred payment period covering a set of bills / promissory notes is two years and 5 years respectively and maximum period may be extended up to 7 years, on selective basis, with the prior approval of IDBI.

Rehabilitation Financing
IDBI has in its portfolio certain potentially viable, weak and sick companies, which can be revived by way of merger /takeover. Rehabilitation Finance Department (RFD), a specialized department, created to achieve the said objective, is on the lookout for resourceful parties interested in takeover/merger or joining in as co-promoter. In addition, IDBI has in its portfolio, other companies which can be revived by undertaking various measures such as strengthening of management, up gradation of technology, infusion of fresh funds, etc.IDBI would like to interact with potential investors / clients who may be interested in takeover, merger or joining as co-promoters etc. in order to achieve the said objectives.

Corporate Banking
Lending Products

i. Working capital and Term Loans ii. Supply Chain Management

Vendor financing Dealers financing

iii. Loans Against Credit Card Receivables iv. Loans Syndication

Government Business i. Tax Collection ii. Pension Disbursals

Cash Management
i. Current Account & Deposits ii. Collection & Disbursement Solutions iii. Debt Servicing iv. E- Banking Solutions

Trade Finance
i. International / Domestic Letter Of Credit ii. Performance & Financial Guarantee iii. Import/ Export Remittance & Collections iv. Trade Advisory

Retail Banking

At IDBI Bank, its not enough to offer a great banking experience. Its equally important to understand the various banking needs and answer them well in advance. In just two years, IDBI has already launched more than 35 sophisticated products. Some of these categories are: -

Choice Of Accounts
i. Instant Savings Account ii. Roaming Current Account iii. Demat Account iv. NRI Services v. Corporate Payroll Account

Anytime, Anywhere Banking

i. SMS Banking ii. Internet Banking iii. Phone Banking iv. ATM Banking

i. Home Loans ii. Personal Loans iii. Loans Against Securities iv. IPO Financing v. ME Overdraft

Privilege Banking
i. Preferred Customer Banking ii. Power Plus Saving Account

Investment Advisory Services

i. Mutual Funds ii. Life Insurance iii. Bonds & Debentures

Beyond Banking
i. ATM Next ii. Talking ATMs iii. Easy Fill Mobile Prepaid Services iv. Bill Payment

Card Products/ Services

i. World Currency Card ii. International Debit - cum - ATM Card iii. Merchant Services iv. Internet Payment Gateway

Treasury Products
Inward & Outward Remittance Forward Contracts Travellers Cheque, Currency Currency Travel Card Customized Risk Management Solutions Interest Rate and Currency Swaps INR and Foreign Currency Option Exotic Swaps and Options Constituent SGL Accounts Structured Finance Solutions Debt Syndication and Distribution

Chapter No. 5 FINANCIAL REPORT OF IDBI Working results: ( Rs. in Crore) ( Crore) Q4 2011- Q4 2010- FY 2011- FY 201012 Total Income 6857 Interest income 6080 Non-Interest Income 777 Total Expenses 5662 Interest expenses Operating expenses Operating Profit Net Profit
IDBI reported a net profit of March 31, 2012, as against 771 crore for the quarter and 2,032 crore for the year ended 516 crore and 1,650 crore in the corresponding quarter and year

11 5701 5024 677 4534 3917 617 1167 651 516

12 25489 23370 2119 21432 18825 2607 4057 2025 2032

11 20685 18542 2143 16527 14272 2255 4158 2508 1650

4869 793 1195 771

Provisions (net) 424

ended March 31, 2011. This amounts to an increase in net profit by 49% as compared to the

corresponding quarter and by 23.15 % for the year. Total business (deposits and advances) as of March 31, 2012 stood at against 3,91,651 Crore as 3,37,584 Crore as of March 31, 2011, registering a growth of 16.02%.

Deposits increased to 2,10,493 Crore at end-March 2012 from 1,80,486 crore at endMarch 2011, with a growth of 16.63%. . Advances increased by 15.32% to 1,81,158 crore at end-March 2012 from 1,57,098 crore as at end- March 2011. As of March 31, 2012, aggregate assets stood at 2,90,837 crore as against 2,53,377 crore as on March 31, 2011, registering a growth of 14.78%.

Balance sheet
Mar ' 12 Mar ' 11 Mar ' 10

in Crores
Mar ' 09 Mar ' 08

Sources of funds
Owner's fund Equity share capital 1,278.38 984.57 724.86 724.78 724.76

Mar ' 12 Share application money Preference share capital Reserves & surplus 16,295.61

Mar ' 11 0.99 11,686.25

Mar ' 10 7,502.26

Mar ' 09 6,719.52

Mar ' 08 6,075.13

Loan funds
Secured loans Unsecured loans Total 2,10,492.56 2,28,066.55 1,80,485.79 1,93,157.60 1,67,667.08 1,75,894.20 1,12,401.01 1,19,845.31 72,997.98 79,797.88

Uses of funds
Fixed assets Gross block Less : revaluation reserve Less : accumulated depreciation Net block Capital work-in-progress Investments 4,548.74 1,853.93 1,554.43 1,140.38 24.50 83,175.36 4,375.10 1,895.77 1,405.82 1,073.51 68.06 68,269.18 4,085.27 1,937.72 1,250.35 897.20 162.04 73,345.46 3,873.95 1,979.56 1,127.40 766.98 77.56 50,047.60 3,894.76 2,022.07 1,173.59 699.10 44.80 32,802.93

Net current assets

Current assets, loans & advances Less : current liabilities & provisions Total net current assets Miscellaneous expenses not written Total 5,426.98 7,439.12 -2,012.14 82,328.11 4,206.13 6,753.77 -2,547.64 66,863.11 4,444.91 8,030.62 -3,585.71 70,818.99 4,882.96 6,160.40 -1,277.45 49,614.70 4,154.02 10,261.89 -6,107.86 27,438.97

Book value of unquoted investments Market value of quoted investments Contingent liabilities Number of equity sharesoutstanding (Lacs) 1,54,197.43 12783.82 1,38,274.78 9845.68 1,28,293.03 7248.62 1,16,577.14 7247.81 1,04,037.89 7247.64

Profit loss account

Mar ' 12 Mar ' 11 Mar ' 10

in Crores
Mar ' 09 Mar ' 08


Mar ' 12 Operating income 25,300.43

Mar ' 11 20,039.87

Mar ' 10 17,063.60

Mar ' 09 12,668.35

Mar ' 08 9,159.74

Material consumed Manufacturing expenses Personnel expenses Selling expenses Adminstrative expenses Expenses capitalised Cost of sales Operating profit Other recurring income Adjusted PBDIT Financial expenses Depreciation Other write offs Adjusted PBT Tax charges Adjusted PAT Non recurring items Other non cash adjustments Reported net profit Earnigs before appropriation Equity dividend Preference dividend Dividend tax Retained earnings 1,160.44 26.22 2,265.10 3,451.76 3,023.59 101.61 3,125.20 18,825.08 116.06 -15,815.94 1,104.93 1,895.88 -1.54 137.25 2,031.59 2,646.61 388.68 60.33 2,197.60 1,026.50 46.34 2,309.97 3,382.81 2,385.14 270.27 2,655.41 14,271.93 127.04 -11,743.56 734.94 1,653.01 -2.69 1,650.32 2,120.72 344.60 55.27 1,720.85 756.99 45.84 1,173.96 1,976.78 2,081.60 253.47 2,335.07 13,005.22 90.98 2,244.09 346.31 1,032.57 -1.43 1,031.13 1,102.33 217.46 31.47 853.40 569.24 48.38 811.35 1,428.97 933.66 113.73 1,047.39 10,305.72 52.70 994.69 127.10 845.26 13.28 858.54 879.58 181.20 30.79 667.59 384.61 25.25 599.00 1,008.86 786.47 138.48 924.94 7,364.41 83.50 841.44 93.25 728.64 0.81 729.46 2,044.36 144.95 22.27 1,877.14

Annual results in brief

Mar ' 12 Sales 23,369.93 Mar ' 11 18,600.82 Mar ' 10 15,272.63

in Crores
Mar ' 09 11,631.62 Mar ' 08 8,020.84

Mar ' 12 Operating profit Interest Gross profit EPS (Rs) 19,336.00 18,825.08 4,056.17 15.89

Mar ' 11 14,469.26 14,271.93 4,157.85 16.76

Mar ' 10 11,758.98 13,005.22 2,726.95 14.23

Mar ' 09 9,901.43 10,305.72 1,377.91 11.85

Mar ' 08 6,551.64 7,364.41 1,333.11 10.06

Annual results in details

Mar ' 12 Other income Stock adjustment Raw material Power and fuel Employee expenses Excise Admin and selling expenses Research and development expenses Expenses capitalised Other expenses Provisions made Depreciation Taxation Net profit / loss Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg.of non-prom. shares (Lacs) Agg.of non promotoHolding (%) OPM (%) GPM (%) NPM (%) 2,118.78 1,187.05 1,420.41 1,426.47 598.09 2,031.61 1,278.38 3768.50 29.48 82.74 15.91 7.97 Mar ' 11 2,083.65 1,046.24 1,208.45 1,876.87 630.66 1,650.32 984.57 3432.81 34.87 77.79 20.10 7.98 Mar ' 10 2,290.96 773.44 1,057.98 1,682.23 13.59 1,031.13 724.86 3430.84 47.33 76.99 15.53 5.87 Mar ' 09 1,389.92 582.63 755.28 392.28 127.10 858.53 724.78 3430.03 47.33 85.13 10.58 6.59 Mar ' 08 1,635.47 384.61 574.18 510.41 93.25 729.45 724.76 3429.86 47.32 81.68 13.81 7.55

Cash flow

in Crores

Mar ' 12 Profit before tax Net cashflow-operating activity Net cash used in investing activity Netcash used in fin. activity Net inc/dec in cash and equivlnt Cash and equivalnt begin of year Cash and equivalnt end of year 2,629.70 -3,109.60 -159.17 560.35 -2,708.42 20,766.07 18,057.65

Mar ' 11 2,280.98 3,515.88 -203.22 2,870.58 6,183.24 14,582.84 20,766.07

Mar ' 10 1,044.72 3,879.39 -307.10 -208.77 3,363.52 11,219.32 14,582.84

Mar ' 09 985.64 2,767.71 -140.06 -167.10 2,460.55 8,758.77 11,219.32

Mar ' 08 822.71 2,144.64 -112.14 -184.82 1,847.68 6,911.09 8,758.77

Directors Report

Year End : Mar '12

The Board of Directors of your Bank takes pleasure in presenting its Report on the business and operations of your Bank for the financial year ended March 31, 2012. During the financial year 2011-12, the performance of your Bank has shown considerable growth on different fronts driven by strategic policy initiatives; expansion in branch network, focus on improved customer service delivery, superior product characteristics, which has resulted in improvement in key profitability indicators. Your Bank was able to widen its customer base both by expanding its outreach, as also by providing a range of innovative products and services. As on March 31, 2012 aggregate deposits and advances of your Bank touched Rs. 2,10,493 crore and Rs. 1,81,158 crore reflecting a growth of 16.63% and 15.32%.

Mar ' 12 Mar ' 11 Mar ' 10

(in %)
Mar ' 09 Mar ' 08

Per share ratios

Mar ' 12 Adjusted EPS (Rs) Adjusted cash EPS (Rs) Reported EPS (Rs) Reported cash EPS (Rs) Dividend per share Operating profit per share (Rs) Book value (excl rev res) per share (Rs) Book value (incl rev res) per share (Rs.) Net operating income per share (Rs) Free reserves per share (Rs) 14.83 15.74 15.89 16.80 3.50 23.65 137.47 151.97 197.91 102.29

Mar ' 11 16.79 18.08 16.76 18.05 3.50 24.23 128.69 147.95 203.54 93.88

Mar ' 10 14.24 15.50 14.23 15.48 3.00 28.72 113.50 140.23 235.40 77.72

Mar ' 09 11.66 12.39 11.85 12.57 2.50 12.88 102.71 130.02 174.79 70.83

Mar ' 08 10.05 11.21 10.06 11.22 2.00 10.85 93.82 121.72 126.38 66.69

Profitability ratios
Operating margin (%) Gross profit margin (%) Net profit margin (%) Adjusted cash margin (%) Adjusted return on net worth (%) Reported return on net worth (%) Return on long term funds (%) 11.95 11.49 7.99 7.92 10.78 11.56 124.19 11.90 11.26 8.12 8.76 13.04 13.02 131.48 12.19 11.66 5.95 6.48 12.55 12.53 174.83 7.37 6.95 6.71 7.02 11.35 11.53 151.49 8.58 7.67 7.84 8.73 10.71 10.72 120.38

Leverage ratios
Long term debt / Equity Total debt/equity Owners fund as % of total source Fixed assets turnover ratio 11.98 7.70 0.09 14.24 6.55 4.58 20.38 4.67 4.18 15.10 6.21 3.27 10.74 8.52 2.35

Liquidity ratios
Current ratio Current ratio (inc. st loans) Quick ratio Inventory turnover ratio 0.72 0.02 27.11 0.62 0.02 26.78 0.55 0.02 19.49 0.79 0.04 18.98 0.40 0.04 9.07 -

Payout ratios
Dividend payout ratio (net profit) Dividend payout ratio (cash profit) 22.10 20.90 24.23 22.49 24.14 22.18 24.69 23.26 22.92 20.56

Mar ' 12 Earning retention ratio Cash earnings retention ratio 76.32 77.69

Mar ' 11 75.81 77.54

Mar ' 10 75.90 77.85

Mar ' 09 74.93 76.40

Mar ' 08 77.06 79.42

Coverage ratios
Adjusted cash flow time total debt Financial charges coverage ratio Fin. charges cov.ratio (post tax) 104.62 0.16 1.11 101.39 0.18 1.12 149.23 1.18 1.09 125.17 1.10 1.09 89.88 1.13 1.11

Component ratios
Material cost component (% earnings) Selling cost Component Exports as percent of total sales Import comp. in raw mat. consumed Long term assets / total Assets Bonus component in equity capital (%) 0.10 0.93 19.15 0.23 0.94 24.86 0.26 0.94 33.77 0.38 0.91 33.77 0.27 0.88 33.77

After the completion of this project the researcher has come to certain conclusions. 1. It is not only the free services that the customer looks in for but how fast the loan is being processed for a customer will make the Bank successful. Therefore, IDBI Bank should have fast loan processing procedure. 2. As Government is the majority share holder in the shares of IDBI bank, which makes this bank more reliable than other private banks, this thing can be used in the favour of IDBI bank by making people aware about this fact and winning their faith. 3. The Bank should lower down the rate of interest so as induced the investors.

4. Various schemes in LAS should be incorporated in order to increase the consumer awareness. 5. More branches should be set so that the Bank becomes easily accessible to the customers and potentials. 6. The bank should provide good facilities to the customers.

7. The modern days technology like internet banking, phone banking, used by IDBI bank for providing banking services has sent positive signals in the mind of consumes.


Varshney, P.N. and Mittal, D.K., Indian financial system, Sultan Chand & Sons, 2006

Bhole, L.M., Financial institutions and markets, Tata McGraw Hill, New Delhi, 1992


2. 3.


Magazines and Newspapers

Annual Report of IDBI IDBI product manual Financial Times The Economic Times