IDBI plans Care, ICRA merger

IDBI plans Care, ICRA merger
ENS ECONOMIC BUREAU

MUMBAI, MAY 31: Industrial Development Bank of India (IDBI) is exploring the possibility of merging its credit rating arm CARE Ltd with rival ICRA Ltd, Chairman and Managing Director of IDBI, G P Gupta said here on Wednesday.

"We are exploring whether CARE and ICRA could be merged. We are working on it," Gupta said soon after IDBI's annual general meeting of shareholders.

IDBI is the founder of CARE while ICRA was founded by term lender IFCI and owns 26 per cent of its equity. IDBI has a 30 per cent stake in IFCI. Global credit rating firm Moody's Investor Services holds 11.36 per cent stake in ICRA. "Moody's is very keen about the merger," Gupta said.

Earlier while addressing the meeting, Gupta said the term lending institution is undertaking a major capital restructuring exercise in order to improve its languishing share valuation as also to enable it to come out with an American Depository Shares (ADS) issue.

``Share price is a major area of concern for the directors of IDBI. Once the capital restructuring exercise comes through there will be considerable improvement in share valuation,'' he said.

The IDBI share is currently hovering at around Rs 33 as against the initial public offer (IPO) price of Rs 130.

On the ADS issue, he admitted that there could be some drag on account of its 30 per cent shareholding in Industrial Finance Corporation of India (IFCI) but expressed confidence of getting over it.

He defended IDBI subscribing to the Rs 101 crore right's issue of IFCI saying ``we have subscribed to the issue as we wanted to protect our 30 per cent shareholding.''

On insurance, Gupta said, the financial institution had not yet taken any decision on roping in a strategic partner.

The FI was planning overseas (cross-border) operations towards which it would submit a proposal to the Union Finance Ministry in two to three days time.

Overseas operations would entail funding Indian companies wishing to set up ventures abroad and not necessarily setting up offices there, he added.

On the Financial institution's much-talked about move towards universal banking, the chairman pointed out that any step on picking up stake in nationalised banks would be taken once the strategy paper, currently under preparation, becomes available.

He informed the shareholders that the bank had filed a suit for recovery in respect of 500 cases amounting to Rs 3000 crores.