IDBI Bank plans to raise $200m from Swiss market

Public sector lender IDBI Bank is planning to raise around USD 200 million from the Switzerland market under its medium-term foreign debt raising programme.

"We have a close eye on the Swiss market. Recently, the Korean Exim Bank had raised money from there. As the opportunity comes, we will look at it," Executive Director Melwyn Rego said.
He, however, declined to give any specific time-frame for raising this amount.
Medium-term-note (MTN) is a debt instrument through which a corporate house or bank raises capital at cheaper rates from overseas market. Usually, there is a fixed coupon or interest rate that is paid by the issuer to the subscriber of the issue on maturity.
Earlier, IDBI Bank has hired investment managers like BNP Paribas, Credit Suisse Group and UBS for raising capital through Swiss franc-denominated bond sale.
IDBI Bank, which has a USD 1.5 billion MTN programme, has already raised around USD 400 million in the first part of this calendar year.
Domestic banks are increasingly looking at Switzerland to raise capital as part of their market diversification drive. In 2011 so far, while Union Bank of India sold 160 million Swiss franc (CHF) (around USD 185 million) worth of 4.5-year-bonds in January, State Bank of India had raised CHF 325 million (around USD 370 million) in the same route. Also, the Exim Bank raised CHF 175 million (around USD 200 million) from the Swiss market in the recent past.
IDBI Bank posted a 20 percent rise in its net profit to Rs 516 crore in the second quarter of current fiscal compared to Rs 429.10 crore a year ago, while total income grew 24.10 percent at Rs 6291.42 crore.

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IDBI Bank to open 250 branches in 12 months

State-owned IDBI Bank said it plans to open about 250 branches across the country and a branch in Singapore over the next year.

"We will be opening 200-250 branches across various states in next 12 months," IDBI Bank Chairman and Managing Director R M Malla said.

Besides, the bank is also looking at ramping up its international presence, he said.

The bank submitted applications to the Monetary Authority of Singapore for setting up an Offshore Banking Unit there and to the China Banking Regulatory Commission for setting up a representative office at Shanghai, he said.

IDBI Bank hopes to get licence from the Singaporean authorities within the next few months, Malla said on the sidelines of a seminar organised by IMI here.

Currently, the bank has one overseas office. It operates from Dubai (UAE). Domestically, the branch network of the Mumbai-based stood at 930 branches as of September.

The bank opened 107 branches in 2010-11, including specialised corporate branches, taking the total to 815 as on March 31, in addition to an overseas branch at DIFC, Dubai.

Of the domestic branch network, 238 are located in metropolitan centres, 307 in urban centres, 184 in semi-urban centres and 86 in rural centres.

In order to ensure improved operating domain, branches at a few locations were relocated and renovated to provide fresh look and feel, similar to other branches of the bank, he said.

The bank constantly endeavours to expand its branch network to execute its strategy of building sufficiently larger customer base, improved customer service and improved CASA contribution, he said.

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IDBI Bank too joins dual rate bandwagon

More banks have started coming out with dual-rate home loans and other freebies like festival rate discounts in the sluggish home loan market.

After ICICI Bank and HDFC, public sector IDBI Bank on Wednesday said it would give a discount of 25-50 basis points (bps) to prospective floating home loan customers and offer a fully floating rate or a combination of fixed and floating rates during the festive season.

“All new borrowers would be given an option of either fully floating rate or a combination of fixed and floating rates. The processing fee for loan amounts upto Rs 25 lakh has been waived. The bank has also reduced the existing floating home loan rates by 25-50 bps,” IDBI Bank said in a statement.

For home loans up to Rs 25 lakh under the fixed-floating combination scheme, the rate will be 10.75 per cent for one year option and 11 per cent for first two years.

After that period, the floating rate will be 10.75 per cent. For loans between Rs 25 lakh-30 lakh, it will be 11 per cent for one year, 11.25 per cent for two years and floating rate of 11 per cent.

For loans between Rs 30 lakh and Rs 75 lakh, the rates will be 11.25 per cent, 11.50 per cent and 11 per cent respectively.

IDBI Bank has also decided to offer concession of 100 bps in rate of interest for all segment of loans as well as 100 per cent waiver of processing fee for auto loans. “All the offers are applicable to the new loans sanctioned between October 15, 2011 to December 31, 2011,” it said.

The ball was set rolling by ICICI which launched home loans with the option of having a fixed rate for either the first year or the first two years. The fixed rate for one year is between 10.5 per cent and 11.5 per cent, depending on the loan amount, and for two years, it is 10.75 per cent to 11.75 per cent.

HDFC also unveiled products with fixed and floating rates — the plans offer fixed rates for the first three (10.75-11.75 per cent) or five years (11.25-11.75 per cent). LIC Housing Finance has come out with a fixed rate of interest for the first five years and on floating rate thereafter, with the interest rate being in the range of 11.15-11.65 per cent.

Axis Bank recently launched a new home loan product offering a lifetime fixed interest rate of 11.75 per cent for 20 years. Under the scheme, the bank will offer home loan to eligible buyers up to 85 per cent of loan-to-value for debt up to Rs 20 lakh and 80 per cent loan-to-value for borrowings above Rs 20 lakh, with a pre-payment charge of 2 per cent of the outstanding amount.

Dena Bank and State Bank of India dropped interest rates on home loans by 25 basis points, while Central Bank of India and Bank of India offered home loans at their base rate of 10.75 per cent.

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