IDFC Ltd, on Tuesday, indicated that its proposed banking entity would rely on four pillars for growth. Rajiv Lall will step down as Executive Chairman of IDFC to take over as Managing Director of the proposed bank. The company believes that its four business pillars are ideally placed to meet its objective of having diversified banking business. “The licence we have received is for universal banking. So, we want to be an universal bank and want to diversify our business,” Mr Lall said at the company’s 17th annual general meeting.
“While infrastructure as a starting position will remain important for us, we will diversify our asset base beyond that . So, we will support corporates outside the infrastructure space, and we will seek to provide lending to mid-market and small and medium enterprises (SMEs). We will also set up a branch network that will provide consumer banking services. And, we will focus on pursuing financial inclusion. These are essentially four pillars of our banking strategy,” he added.
Mr. Lall said IDFC Bank, which will be a listed entity, would start operations with a clean slate, and didn’t expect non-performing assets to be a drag on the future profitability of the bank. “As a bank, we will be the best capitalised bank of any start-ups in the history of Indian financial services sector. We expect to start the banking operations with a capital of Rs.12,000 crore. Out of our (IDFC) total net worth of Rs 17,000 crore, Rs.5,000 crore will remain with the parent and the rest will be allocated to the banking entity. In this, we will have allocated or set aside enough to protect us from the worse case possibility in terms of stressed assets,” added.
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On branch network, IDFC Bank’s strategy, he said, would be to start in large centres at the one end and also in the Tier 6 locations of India simultaneously. “We will open branches in Tier 1 and Tier 6 to start with, then we will fill the middle. We will provide full range of banking services in Tier 6 , but in a targeted fashion. We don’t aim to be in every district but will choose select number of districts and be present intensively,” he added.