Industrial Development Bank of India (IDBI) plans to enter the European and the Asian markets. It is actively considering the setting up of branches in these international markets.
IDBI is India's leading development financial institution and the 10th largest development bank in the world. It has also promoted IDBI Bank, IDBI Capital Services, IIMCO (asset management) and SIDBI (funding to small-scale industries).
The decision to venture into international markets has been taken at a time when the global economic activity has picked up after the sharp slowdown in 1998. Therefore, although the timing may prove to be right, the ability of Indian financial institutions to compete in international markets is yet to be ascertained. In India, financial institutions have historically enjoyed the support of the government and its various organisations.
In the international markets however, the competition is very stiff and income spreads are on an average thin. Such an environment can take its toll on the bottomline of IDBI atleast in the initial years of international operations. Moreover, to survive in such competitive markets, IDBI would have to spruce up its act to international levels if it were to grow into an internationally dominant institution.
Analysts have rated the stock as a 'BUY' mainly on account of the economic recovery, which is expected to result in increased business activity. Also, this pick up in the economy will help IDBI to recover atleast a part of its large non performing loans, which registered a large increase during the recent economic slowdown.
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