IDBI to raise $125 million through medium-term notes

IDBI Bank will raise funds worth $125 million for three years at Libor plus 180 basis points under its medium term note (MTN) programme in November 2010.

“The funds will be utilized to give out foreign currency loans,” said R M Malla, chairman and managing director, IDBI Bank.

The bank has already raised $350 million at 4.75% for 5.5 years under the MTN programme.

“International banks had offered USD 475 million to this issue but we raised only $350 million then. The rest $125 million will be raised in November,” said Malla.

Agreement will be signed on November 1 while the withdrawal takes place on November 15, 2010. There are 10 international banks participating in this issue.

The bank will then be left with around $1 billion under the MTN programme listed on Singapore Stock Exchange which it plans to raise around March-June 2011.

The bank also wishes to issue tax free infrastructure bonds. “We have recently requested the government to allow us to issue infra bonds,” said Malla.

IDBI posted a net profit of Rs429 crore in the second quarter of current fiscal as compared to Rs254 crore in the same period last year.

Net interest income (NII) grew 152% in a year as on September 30, 2010, on account of fall in cost of funds from 7.45% last year to 6.65% currently.

The bank witnessed credit growth of 24% year-on-year while deposits grew 18% in the same period. For this entire fiscal, IDBI bank aims at 18-20% credit growth.

“Our focus is higher on CASA and refinancing agencies,” said Malla.