IDBI Bank has sounded out its new owner LIC seeking another tranche of up to Rs 12,000 crore to meet its huge provisioning requirements amid mounting losses.
The fresh support is required to cover for non-performing assets (NPAs) in the January-March quarter.
Life Insurance Corporation of India (LIC) completed acquisition of 51 per cent controlling stake in IDBI Bank on January 21. The bank received total capital of Rs 21,624 crore from the insurer in the four-month period prior to formalisation of acquisition.
Recently IDBI and LIC officials met Department of Financial Services senior officials and are said to have taken up the matter of fresh capital infusion. LIC has not commented so far.
In the backdrop of capital infusion from LIC, the bank has achieved regulatory capital requirement as on December 31, 2018, and its common equity tier-1 (CET-1) capital improved to 9.32 per cent as on December 31, 2018, against 6.62 per cent a year ago.
IDBI Bank Q3 loss has widened threefold to Rs 4,185 crore. Total income decreased to Rs 6,190.94 crore for the quarter, compared with Rs 7,125.20 crore in the corresponding quarter a year ago.
The bank's gross NPAs shot up to 29.67 per cent of gross advances during the quarter, against 24.72 per cent in the year-ago period. However, net NPAs declined to 14.01 per cent of the total advances, from 16.02 per cent in the December 2017 quarter.
As a result, the bank's provision for bad loan increased to Rs 5,074.80 crore in Q3, compared with Rs 3,649.82 crore a year ago.
Provisions and contingencies for the September-December period spiked 30 per cent to Rs 4,179.12 crore against Rs 3,205.56 crore in December quarter last fiscal.
Gross bad loans as a percentage of total loans stood at 24.72 per cent at end-December compared with 24.98 per cent in the previous quarter and 15.16 per cent a year ago.
IDBI Bank, with its highest NPAs, had got the maximum Rs 10,610 crore from government last year to maintain regulatory capital in January last year.
(Anjana Das can be contacted at firstname.lastname@example.org)