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Last year, the Reserve
(RBI) had turned down the proposal of to acquire IDBI’s AMC business, saying sponsoring a mutual fund is not in consonance with the activity of an operating non-banking financial company.
“We have once again started the process to sell our mutual fund business, we plan to completely exit the business,” said Rakesh Sharma, MD, IDBI Bank. “Earlier, we were growing the assets under management, but now it’s stagnant.”
Muthoot Finance had earlier proposed to purchase 100 per cent equity shares of IDBI AMC and IDBI MF Trustee Company held by the sellers for a total consideration of Rs 215 crore. This sale was nixed by the RBI.
Started in January 2010, IDBI Asset Management is 66.67 per cent owned by IDBI Bank and 33.33 per cent owned by IDBI Capital Market & Securities Ltd. The AMC had assets under management (AUM) of Rs 4,120 crore as of March 31, 2021.
This is the lender’s second attempt to sell its AMC business. In May 2019, IDBI had called for bids to completely exit this business.
The RBI had recently asked lenders to limit their exposure in capital intensive insurance companies at a maximum of 20 per cent. The regulator also wants banks to limit stake in other subsidiaries below 30 per cent. The RBI wants banks to focus on their main areas of business instead of locking away capital in non-core sectors.
The lender recently sold its stake in IDBI Federal Insurance and brought it down to 23 per cent. The lender also has plans to sell some part of its 26 per cent stake in NSDL if the latter plans an initial public offering.
IDBI Bank exited RBIs prompt corrective action (PCA) framework after four years in March this year, posted profits of Rs 512 crore at the end of Q4. The net non-performing loan ratio improved to 1.97 per cent. At the end of March 2021, Rs 6,385 crore worth of loans were sitting in the SMA category out of which loans due beyond 60 days were at Rs 1,621 crore, while loans due between 30 and 60 days were at Rs 2,466 crore.
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