Dubai: IDBI Bank, India's largest provider of project finance and infrastructure loans, sees huge opportunities in the UAE and the Gulf region, the bank's executive director, Melwyn Rego told Gulf News.
"We have rich experience as a development finance institution in funding large-scale, long-term projects in India. Now, in our role as a commercial bank we understand the financing requirements of infrastructure and long-term projects. In the UAE, Gulf and wider Middle East North Africa region we see huge opportunities for growth," said Rego.
The bank which got a Category 1 banking licence to operate from the Dubai International Financial Centre (DIFC) intends to begin with financing Indian firms that are already their clients and eventually extending their financing activities to companies irrespective of their ownership or country of origin.
"The whole purpose of opening a branch in the DIFC is to target international customers and acquire quality assets in the UAE and the region. Of course, we will start with our existing Indian customers and we will start acquiring new customers from the region," said Rego.
The DIFC branch is the first International branch of IDBI Bank. "Our DIFC licence allows us to offer a wide range of banking services. We will start with financing companies and underwriting syndications," said N.S. Venkatesh, chief executive officer of IDBI Bank's DIFC operations.
To meet its foreign currency funding activities, the bank will soon raise between $300 million (Dh1.1 billion) and $500 million through a medium term note programme. IDBI Bank has registered to sell the dollar-denominated notes in Singapore.
Despite the slower loan growth in the region due to corporate deleveraging and reduced risk appetite of banks following the global credit crunch, IDBI Bank sees opportunities for healthy asset growth in the UAE and the Gulf.
"We have several decades of dealing with lending in various phases of business cycles. We see the current difficulties faced by companies in the region as a passing phase and view this as a right time to build relationships and long term assets," said Rego.
Vast expertise
IDBI Bank is the second largest syndicator of loans in India and fourth largest in Asia-Pacific. The bank aims to foster greater trade and cross-border capital flows between India and Middle East region through its DIFC branch. Using its vast expertise in financing mega industrial projects in India, IDBI Bank also seeks to support and facilitate industrial development in the region over a period of time.
"DIFC is going to be our strategic base to launch our operations in the region because of its conducive business environment. We want to develop the DIFC office as our international operations base for raising foreign currency resources from the US and European markets in addition to the Asian markets," said Rego.
IDBI Bank's operating profit as of the fiscal year ended March 31 was $607.35 million (Rs27.27 billion) with a net profit of $229.62 million (Rs10.31 billion). As of March 31, IDBI has a capital adequacy ratio of 11.31 per cent.
Background Merged entity
IDBI Bank is majority (52.67 per cent) owned by the Government of India. The bank's parent institution the Industrial Development Bank of India (IDBI) was set up under an Act of Parliament of India in 1964 as a Development Financial Institution, was converted into a commercial bank Industrial Development Bank of India Limited (IDBI Ltd.) in October 2004. In April 2005, IDBI Bank Ltd., a wholly owned subsidiary of IDBI was amalgamated with IDBI Ltd. In October 2006, United Western Bank, a bank with a predominant presence in Western India, was also amalgamated with IDBI Ltd. The mergers provided the erstwhile IDBI a ready platform for conversion into a full service commercial bank offering a suite of corporate and retail products. The merged entity was renamed as IDBI Bank Ltd.
