E-Paper
IDBI to float AMC, commodity, insurance, pension arms
IDBI has charted out major plans to foray into commodities, MF, insurance & pension, shifting focus from wholesale to retail.
IDBI Bank has charted out major plans to foray into commodities, mutual fund, insurance and pension, as it has shifted focus from wholesale to retail segment to emerge as a financial powerhouse.
"We have applied to SEBI and RBI for approvals to set up an asset management company. The AMC is likely to be in place by March 2006," IDBI Capital CEO S Muhnot said.
AMC is likely to start operations from the first quarter of next fiscal or from April 2006.
IDBI earlier had ties with Principal Financial of US in IDBI Principal Mutual Fund but it exited the venture two years ago. A major chunk of IDBI's stake was bought by PNB and Vijaya Bank in the mutual fund.
In the proposed AMC, IDBI Bank will hold 65 per cent while its subsidiary IDBI Capital will hold 35 per cent stake.
As part of IDBI diversification plans into other businesses to broadbase income, Muhnot said: "We will set up a commodities subsidiary for trading on a proprietary basis as well as providing broking services to investors to participate in the commodities market."
IDBI has applied to Reserve Bank for permission three months back to set up IDBI Commodities Limited.
As banks are making a beeline to enter insurance business to grab a pie of long-term funds, IDBI Bank has also approached Insurance Regulatory and Development Authority for license to foray into life insurance with a foreign partner.
"The three foreign insurers shortlisted for the JV are -- Fortis, Generali and Dai-ichi," a top IDBI official said.
IDBI Capital, which is the second largest provident fund manager (after EPFO) with a corpus of more than Rs 32,000 crore, is eyeing pension foray when the government puts in place the legislation.
"We have made presentations to PFRDA. We are waiting for the PFRDA Bill to be passed," he said.
On inorganic growth, IDBI Capital ruled out buying UTI Securities, which is looking for a prospective buyer.
"IDBI Capital is the largest Primary Dealer in government securities and provides a host of other financial services, so we are not not buying into UTI Securities as we are already present in all the segments," Muhnot said.
Besides PD, IDBI Capital provides various services like investment banking, stock broking, bond trading, derivatives trading, mutual fund selling and pension fund management.
"The focus is now on moving from wholesale to retail foraying and 'idbipaisabuilder.In will be the vehicle to reach out to retail investors.
IDBI Capital has launched an online investment portal to provide information, analysis and tips to retail investors to help them invest in IPOs, equities and mutual funds. Later commodities, F&O and debt instruments will be added to it.
IDBI is forming the new subsidiaries in order to give it a cushion in an increasingly competitive and liberalised environment to increase fee-based income in an interest rate-volatile environment.
