Slowdown forces IDFC to delay retail banking foray

Infrastructure Development and Finance Corporation (IDFC) is likely to postpone its plans to enter the retail banking sector, reports Mahua Venkatesh.

Infrastructure Development and Finance Corporation (IDFC) is likely to postpone its plans to enter the retail banking sector.

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The company appears to have had to rethink its plans in view of the impact of the global meltdown on retail finance.

An IDFC spokesperson, when contacted, however refused to comment on the issue. “We do not want to say anything on the issue at this point,” he said.

Sources said retail finance, especially credit, has slowed down in the last 10 months. Demand for retail credit has also dried up with most banks taking a cautious approach.

“There has been no progress and a decision would be taken only after weighing all pros and cons,” an IDFC official told Hindustan Times, on condition of anonymity.

The company had been keen to capitalse on the high growth of the retail finance sector. The move would have also allowed IDFC to raise deposits and offer credit. Future course of action would depend on when the market conditions change, the sources said.

Infrastructure financing in India requires huge capital and has long gestation period. Several infrastructure projects in states like Maharashtra, Assam and Andhra Pradesh have been postponed due to the slowdown.