IDBI to ask promoters to pledge 51% shares

IDBI to ask promoters to pledge 51% shares
Press Trust of India

MUMBAI, DEC 6: Industrial Development Bank of India (IDBI) is planning to ask its large corporate borrowers, who were under pressure to repay loans, to pledge 51 per cent of their shares with voting rights with the institution.

This forms part of the strategy discussed by IDBI at aboard meeting last week, to identify and reduce the FI's non-performing assets, senior officials said.

``We have decided to embark on this measure to safeguard the funds lent,'' the officials said, pointing out that corporate borrowers had a tendency to delay paying off their loan outstandings.

``They might not like to do it, but we have no choice either. IDBI can also exercise the option of converting its loans into equity if the situation so warranted,'' they said.

For corporate borrowers, the other measures being taken are: creation of trust and retention accounts, escrow accounts and concurrent accounts, all with a view to ensuring that the advances made can be retrieved, the officials said.

A second strategy discussedat the board meeting was taking recourse to one-time settlement through negotiation and compromise. Under this, the defaulter will also be offered advise on capital restructructing by IDBI.

IDBI has set up a mergers and amalgamation cell, which will be recommending mergers to its borrowers whose accounts have been identified as potential NPAs, the officials said.