IDFC plans to start a bank
With infrastructure financing slowing down in the country, the development finance institution is looking at becoming a full-fledged bank, sources said.india Updated: Oct 31, 2008 21:08 IST
Infrastructure Development and Finance Corporation (IDFC) is set to foray into retail commercial banking. With infrastructure financing slowing down in the country, the development finance institution is looking at becoming a full-fledged bank, sources said. This would enable IDFC to raise deposits and offer loans to retail customers as well.
“The proposal is at a nascent stage and it will take some time for it to finalise,” a company source told HT. It is yet to apply for a banking licence. However, it hopes to initiate the process at the earliest. He said a more sustainable model has to be put in place especially at the wake of the recent financial market fiasco.
IDFC, set up in 1997 by the United Front government, was primarily meant to facilitate financing infrastructure projects in the private sector. However, apart from infrastructure financing, it is also into asset management and investment banking.
IDFC registered a 17.3 per cent increase in net profit during the July-September quarter at Rs 210.4 crore as against Rs 179.4 crore in the corresponding period in 2007-08. It realised a fee of Rs 77 crore from its asset management business while an amount of Rs 73 crore came from its investment banking and broking activity.
Interestingly, the US-based investment bank Goldman Sachs also turned into a full-fledged commercial bank in order to sustain itself. A market analyst said that infrastructure financing is long term in nature and often non-sustainable due to the long tenor of the loans.