"We do not want to take over non-banking finance companies to build up our resource base. Our plan is to enter into strategic alliances with big banks which can sell our retail products over the counter, across the country," IDBI chairman GP Gupta said.

Analysts says the move could be IDBI's answer to ICICI's aggressive growth plan through mergers and acquisitions. Over the past two years, ICICI got SCICI merged with itself and consequently took over ITC Classic and the Lalbhais-controlled Anagram Finance. The objective was to build a countrywide retail base for resource mobilisation.

In an exclusive interview to The Financial Express -- held immediately after the IDBI board meeting passed the term-lending institution's results for the first quarter of1998-99 -- Gupta wore his heart on his sleeve and made no bones about the fact that he is against the idea of universal banking and growth through mergers and acquisitions. "We cannot lose the focus of development banking. That is our core business. The role of development financial institutions is still there. We can talk about universal banking after maybe five years," he said.

On growth through mergers and acquisitions, Gupta said: "Let others do it. I am against it as it is not easy to erase cultural differences...I do not want to take on NBFCs to create a retail network for raising resources," Gupta said.

The IDBI chairman wants to use the branch network of mega public-sector banks to sell bonds and other debt instruments. "We will soon initiate talks with big banks...We can use their branches to raise resources. There is no conflict of interest. There are so many ways of sharing business...So far, we have had this kind of arrangement with only IDBI Bank. Now we will extend it to big public-sectorbanks." If Gupta succeeds in roping in state-run banks to sell IDBI bonds, it will be the first instance of banks and financial institutions striking alliances on the liabilities (fund-raising) front.

So far, there have been only stray instances of banks and institutions joining hands to build assets -- banks offering short-term working capital loans and institutions extending project financing to the same client. Gupta also wants to make use of IDBI's 38 branch offices and 10,000-and-odd empanelled agents to increase its investor base. On the institution's proposed foray into the insurance sector, Gupta said: "We would like to enter both life as well as general insurance sectors. We are talking to a few foreign companies...for technology as well as equity participation. Things are still at a discussion stage."

Gupta's immediate agenda is, however, to help core projects take off by making available additional rupee resources, enhancing credit limits through guarantees and sorting out problems in regard toescrow accounts (for power projects). "We will approach the government to lift the 40 per cent cap on rupee resources for core projects selectively. When there is a problem in accessing external commercial borrowings, we will have to offer additional rupee loans for faster completion of projects," he said.

The IDBI chief is confident of the industrial sector picking up in the second half of the current fiscal. "There are distinct signs of revival. Steel and cement sectors are showing signs of improvement. Once the infrastructure and housing sectors pick up, they till trigger the growth...I am sure things will change in the next six months," he said.