Mumbai: LIC-owned IDBI Bank registered a windfall income tax refund of Rs 2,305 crore from a claim pertaining to the years 1998-2001. The bank on Monday reported its first full year profits after five years with a four-fold jump in Q4 net profit to Rs 512 crore from Rs 135 crore in the previous year. Although the tax refund gains were more than the profit, the bank’s MD & CEO Rakesh Sharma said that the entire refund amount has been used for making accelerated provisioning as a prudent measure.
“The tax refund was of Rs 2,305 crore. Of which the interest component was Rs 1,308 crore, which has gone into income part and has been taken for provision,” he said.
A large chunk of the tax refund has been used to make provisions for bad loans under the Stressed Asset Stabilisation Fund– a bad-bank like entity that was created to house the non-performing assets of Industrial Development Bank of India when it underwent a reverse merger with its subsidiary IDBI Bank. Sharma said that the SASF still had Rs 2,700 crore of bad loans which had to be provided for if they were not recovered in three years.
Sharma said that prospects for the bank had improved as it has been removed from RBI’s prompt corrective action framework which placed lending restrictions on the bank. “We will take a calibrated approach to growing our loans. We are looking at 8-10% growth in corporate loans and 10-12% growth in retail. Overall we are looking at a 10% growth in loans,” said Sharma.