"In line with the concept of universal banking, IDBI has plans to enter banking either by forging a strategic alliance with or by taking equity stakes in a bank" Gupta told newsmen in Dubai.

Gupta said IDBI is holding talks with a few prospective banks but they have not reached conclusive stage. "We will only join hands with a bank and we will not acquire majority stake", he said. At present, the government of India holds 78 per cent stake in BoB's equity, IDBI is expected to pick up a part of the stake and bring down the government's stake to 51%.

Gupta was speaking at a function organised to announce the introduction of online trading in Dubai, by the UAE based financial investment consultancycompany Elfina in association with Pratibhuti Viniyog Ltd, a leading stock and share broker on National Stock Exchange (NSE) at Bombay and Pune.

The IDBI's new policy to take over a public sector bank marks a radical shift in the IDBI's business strategy which has--unlike the ICICI -- all long avoided the idea of growing through mergers and acquisitions.

IDBI's long-term strategy includes roping in foreign partners for its two subsidiaries IDBI Capital Markets Services Ltd (ICMS) and IDBI Investment Management Company Ltd. Besides, it is also in talks with a global investment bank for a technical tieup for corporate advisory services.

"We cannot offer an equity stake to the global investment bank and hence it has to be a technical tieup. However, in both our subsidiaries, we are ready to offer up to 50 per cent stake to foreign partners," Gupta said recently. US financial giant Principal Group Inc -- which has a large presence in pension business -- is expected to pick up to a 50% stake inIIMC.

IDBI has embarked on a business restructuring exercise to retain its numero uno position among term-lending institutions. The trigger point of the exercise was a 16.1 per cent drop in its net profits for fiscal 1999.

"We have already firmed up our short-term strategies. We have also instituted a working group which will chalk out the long-term strategy--Vision 2005--by August 1," Gupta said. Its short-term strategy includes a renewed focus on corporate loans and fee-based business. Besides, the institution also wants to push foreign currency loans to corporates, develop forex treasury products and have a relook at the refinance business. IDBI is also in the process of appointing relationship managers to handle its top 200 clients and streamline the credit delivery system. It plans to reduce the credit delivery time to about 15 days.

In the long run, IDBI wants to enter into cross-border financing and take exposures in projects abroad along with the International Finance Corporation (IFC) ofWashington.

The institution also plans to enter the insurance sector as and when it opens up and turn into a universal bank over the next few years. "We have not shelved the plan to enter the insurance sector. Boston Consultancy and KPMG will shortly make presentations before the IDBI board in this regard," Gupta said. IDBI had earlier promoted a private bank which is called the IDBI bank.