The IDBI Bank Limited (IDBI Bank or IDBI) is a

development finance institution A development financial institution (DFI), also known as a development bank or development finance company (DFC), is a financial institution that provides risk capital for economic development projects on a non-commercial basis. , total commitme ...

under the ownership of

Life Insurance Corporation of India Life Insurance Corporation of India (LIC) is an Indian Public Sector Undertakings in India, central public sector undertaking headquartered in Mumbai, Maharashtra, India. It is under the ownership of Ministry of Finance (India), Ministry of Fi ...

and

Government of India The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, c ...

. It was established in 1964 as Industrial Development Bank of India, a

, which provided financial services to industrial sector. In 2005, the institution was merged with its commercial division, IDBI Bank, forming the present-day banking entity and was categorised as "other development finance institution" category. Later in March 2019,

asked

Life Insurance Corporation Life Insurance Corporation of India (LIC) is an Indian central public sector undertaking headquartered in Mumbai, Maharashtra, India. It is under the ownership of Ministry of Finance, Government of India. The Life Insurance Corporation of In ...

to infuse capital in the bank due to high NPA and capital adequacy issues and also asked LIC to manage the bank to meet the regulatory norms. IDBI was put under Prompt corrective action of the RBI and on 10th March 2021 IDBI came out of the PCA. At present direct and indirect shareholding of

in IDBI Bank is approximately 95%, which Government of India (GoI) vide its communication F.No. 8/2/2019-BO-II dated December 17, 2019, has clarified and directed all Central/State Government departments to consider IDBI Bank for allocation of Government Business. Many national institutes find their roots in IDBI like

SIDBI Small Industries Development Bank of India (SIDBI) is the apex regulatory body for overall licensing and regulation of micro, small and medium enterprise finance companies in India. It is under the jurisdiction of Ministry of Finance , Governm ...

, EXIM,

National Stock Exchange of India National Stock Exchange of India Limited (NSE) is the leading stock exchange under the ownership of various group of domestic and global financial institutions, public and privately owned entities and individuals. It is located in Mumbai, Mah ...

SEBI The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in India under the ownership of Ministry of Finance within the Government of India. It was established on 12 April 1988 as an executive ...

National Securities Depository Limited National Securities Depository Limited (NSDL) is an Indian central securities depository, based in Mumbai. It was established in August 1996 as the first electronic securities depository in India with national coverage. It was established base ...

. The bank has an aggregate balance sheet size of . It has 3,683 ATMs, 1,892 branches, including one overseas branch in

Dubai Dubai (, ; ar, دبي, translit=Dubayy, , ) is the most populous city in the United Arab Emirates (UAE) and the capital of the Emirate of Dubai, the most populated of the 7 emirates of the United Arab Emirates.The Government and Politics of ...

, 58 e-lounges and 1,407 centres . ,

holds the 49.24% shareholding and the

holds 45.48%, with LIC being in control of the management of the bank.

History

Overview of development banking in India

Development Banking emerged after the

Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...

and the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

in the 1930s. The demand for reconstruction funds for the affected nations compelled in setting up of national institutions for reconstruction. At the time of Independence in 1947, India had a fairly developed banking system. The adoption of bank dominated financial development strategy was aimed at meeting the sectoral credit needs, particularly of agriculture and industry. Towards this end, the

Reserve Bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central ba ...

concentrated on regulating and developing mechanisms for institution building. The commercial banking network was expanded to cater to the requirements of general banking and for meeting the short-term working capital requirements of industry and agriculture. Specialized Development Financial Institutions (DFIs) such as the IDBI,

NABARD National Bank for Agriculture and Rural Development (NABARD) is an apex regulatory body for overall regulation of regional rural banks and apex cooperative banks in India. It is under the jurisdiction of Ministry of Finance, Government of India ...

, NHB and

were set up to meet the long-term financing requirements of industry and agriculture.

Formation of Industrial Development Bank of India (IDBI)

The Industrial Development Bank of India (IDBI) was established in 1964 under an

Act of Parliament Acts of Parliament, sometimes referred to as primary legislation, are texts of law passed by the Legislature, legislative body of a jurisdiction (often a parliament or council). In most countries with a parliamentary system of government, acts of ...

as a wholly-owned subsidiary of the

Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible for ...

. In 1976, the ownership of IDBI was transferred to the Union government and it was made the principal financial institution for coordinating the activities of institutions engaged in financing, promoting and developing industry in India. IDBI provided financial assistance, both in rupee and foreign currencies, for green-field projects and also for expansion, modernization, and diversification purposes. In the wake of financial sector reforms unveiled by the government since 1992, IDBI also provided indirect financial assistance by way of refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of the sale of indigenous machinery on deferred payment terms. After the public issue of IDBI in July 1995, the government shareholding in the bank came down from 100% to 75%. IDBI played a pioneering role, particularly in the pre-reform era (1964–91), in catalyzing broad-based industrial development in India in keeping with its Government-ordained 'development banking' charter.
Some of the institutions built with the support of IDBI are the

Securities and Exchange Board of India The Securities and Exchange Board of India (SEBI) is the regulatory body for securities and commodity market in India under the ownership of Ministry of Finance within the Government of India. It was established on 12 April 1988 as an executive ...

(SEBI),

(NSE), the

(NSDL), the

Stock Holding Corporation of India Limited Stock Holding Corporation of India Limited (SHCIL) is an Indian custodian and depository participant, based in Navi Mumbai, Maharashtra. SHCIL was established in 1986 as a public limited company and is a subsidiary of IFCI. It is also responsi ...

(SHCIL), the Credit Analysis & Research Ltd, the

Exim Bank (India) Exim Bank or Export-Import Bank may refer to: * Exim Bank (Bangladesh), one of the leading private commercial banks in Bangladesh *Exim Bank (Comoros), a commercial bank in the Comoros *Exim Bank (Djibouti), a commercial bank in Djibouti * Exim Bank ...

, the

Small Industries Development Bank of India Small Industries Development Bank of India (SIDBI) is the apex regulatory body for overall licensing and regulation of micro, small and medium enterprise finance companies in India. It is under the jurisdiction of Ministry of Finance , Governm ...

(SIDBI) and the Entrepreneurship Development Institute of India.

Conversion of IDBI into a commercial bank

A committee formed by RBI recommended the development financial institution (IDBI) to diversify its activity and harmonize the role of development financing and banking activities by getting away from the conventional distinction between commercial banking and developmental banking. To keep up with reforms in financial sector, IDBI reshaped its role from a development finance institution to a commercial institution. With the ''Industrial Development Bank (Transfer of Undertaking and Repeal) Act'', 2003, IDBI attained the status of a limited company viz., IDBI Ltd. Subsequently, in September 2004, the

incorporated IDBI as a 'scheduled bank' under the ''RBI Act, 1934''. Consequently, IDBI formally entered the portals of banking business as IDBI Ltd. from 1 October 2004. The commercial banking arm, IDBI Bank, was merged into IDBI in 2005.

Direct government intervention

The merger was expected to streamline operations of the bank. However, IDBI continued to base its policy towards industrial sector like the erstwhile IDBI entity did. This resulted in the retail business of the bank to be limited to 13 percent of its total business. , the total

Non Performing Assets (NPA) A non-performing loan (NPL) is a bank loan that is subject to late repayment or is unlikely to be repaid by the borrower in full. Non-performing loans represent a major challenge for the banking sector, as it reduces the profitability of banks, and ...

rose to and were about 28 percent of its total loans. This was the highest among Indian banks. The Union government intervened, with

bailing out the bank with an infusion of crores. On 29 June 2018, LIC got a technical go-ahead from the Insurance Regulatory and Development Authority of India (IRDAI) to increase stake in IDBI Bank up to 51%. LIC completed the acquisition of 51% controlling stake on 21 January 2019, with a total investment of crores.

Operations

Acquisition of United Western Bank

In 2006, IDBI Bank acquired

United Western Bank United Western Bank (UWB) was an Indian bank founded in 1936 that IDBI Bank acquired in 2006 in a rescue. The Reserve Bank of India placed UWB under a moratorium to protect the interest of public and depositors as growing losses eroded its capita ...

(headquartered at Satara) in a rescue. By acquiring UWB, IDBI Bank doubled the number of its branches from 195 to 425.

Strategic disinvestment to LIC

LIC of India completed the acquisition of 51% controlling stake in the bank in January 2019, making it the majority shareholder. Subsequent to the enhancement of equity stake by LIC of India, Reserve Bank of India has clarified via press release on 14 March 2019, that IDBI Bank stands re-categorised as a private sector bank, with retrospective effect from 21 January 2019. LIC took over the management control of the bank while the Union government, categorised as a promoter.

Listings and shareholding

IDBI Bank's equity shares are listed on

Bombay Stock Exchange BSE Limited, also known as the Bombay Stock Exchange (BSE), is an Indian stock exchange. It is located on Dalal Street in Mumbai. Established in 1875 by cotton merchant Premchand Roychand, a Jain businessman, it is the oldest stock exchange in ...

and the

. , the Union government held 45.48% shares in IDBI Bank, while LIC held 49.24% and the remaining is held by non-promoters.

Employees

As of 31 March 2015, the bank had 16,555 employees, out of which 197 were employees with

disabilities Disability is the experience of any condition that makes it more difficult for a person to do certain activities or have equitable access within a given society. Disabilities may be cognitive, developmental, intellectual, mental, physical, se ...

. The average age of bank employees on the same date was 34 years. The bank reported a business of ₹25.64 crores per employee and a net profit of ₹12.17 lakhs per employee during the FY 2012–13. The company incurred a loss of ₹1,538 crores towards

employee benefit Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...

expenses during the same financial year. As promised by the bank's MD and CEO the employees will keep getting the same benefits and enjoy the same job security even after LIC getting the promoter status.

IDBI Intech

IDBI Intech Ltd. (IIL) is a wholly owned subsidiary of IDBI Bank, established in 2000. It provides IT related services in the areas of

Consultancy A consultant (from la, consultare "to deliberate") is a professional (also known as ''expert'', ''specialist'', see variations of meaning below) who provides advice and other purposeful activities in an area of specialization. Consulting servic ...

, System Integration, System implementation & support, Applications & Server hosting and other IT related managed services and specialized training. IDBI Intech has been accredited with ISO 9001:2000 certification for IT-related services including Data Centre Management and Call Centre, and also Certified IT Security Auditing Organisation with the

Indian Computer Emergency Response Team The Indian Computer Emergency Response Team (CERT-IN or ICERT) is an office within the Ministry of Electronics and Information Technology of the Government of India. It is the nodal agency to deal with cyber security threats like hacking and phis ...

(CERT-In).

Awards and recognitions

* IDBI Bank ranked #1197 in the

Forbes Global 2000 The ''Forbes'' Global 2000 is an annual ranking of the top 2000 public companies in the world, published by ''Forbes'' magazine. "The Global 2000" annual ranking is assembled by ''Forbes'' using a weighted assessment of four metrics: sales, profi ...

in May 2013. * It received the 'Overall Best Bank' and 'Best Public Sector Bank' awards in the Dun & Bradstreet Banking Awards, 2011. * In 2011, it received Banking Technology awards for best use of Business Intelligence and the best Risk Management from Indian Banks Association.

References

External links

* {{DEFAULTSORT:Idbi Bank Banks established in 1964 Banks based in Mumbai Indian companies established in 1964 Private sector banks in India Life Insurance Corporation 1964 establishments in Maharashtra Companies listed on the National Stock Exchange of India Companies listed on the Bombay Stock Exchange