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<ul><li>Analysts believe that a potential acquisition will improve lending capability and expand branch footprint <keyword id="46013" type="General" weightage="80" keywordseo="kotak-mahindra-bank" source="Orion">Kotak Mahindra Bank</keyword>.</li><li>Market unclear on such a large acquisition would play out if it leads to a merger eventually.</li><li>The end game should be full acquisition and amalgamation of <keyword id="6357560" type="General" weightage="80" keywordseo="idbi-bank" source="Orion">IDBI Bank</keyword>.</li></ul> <keyword id="6368369" type="General" weightage="50" keywordseo="life-insurance-corporation-of-india" source="Orion">Life Insurance Corporation of India</keyword> along with the government are looking to divest 60.72% in <keyword id="67881" type="General" weightage="100" keywordseo="idbi" source="Orion">IDBI</keyword> Bank. The process has already been kicked off and this will be a test case for the government as it will give it a blueprint for future divestments. So far media reports have speculated that Kotak Mahindra Bank was in the fray, but now <keyword id="3313307" type="General" weightage="40" keywordseo="nomura-global-markets-research" source="Orion">Nomura Global Markets Research</keyword>, a Japanese investment bank, has come out with a report that projects various scenarios of the potential acquisition and also explains how Kotak Mahindra Bank stands to gain if it acquires the bank. For starters, a possible IDBI acquisition could take KMB’s loan book to Rs 5 trillion plus along with a CASA ratio of 50%, which would be ahead of industry’s. The acquisition would also result in a sharp expansion in its branch footprint. Analysts at <keyword id="6354527" type="General" weightage="80" keywordseo="nomura" source="Orion">Nomura</keyword> believe that the acquisition would enhance its lending capability as the loan to deposit ratio will fall to 78% from 85% in Q1FY24. Analysts at Nomura have painted different scenarios of any potential transaction which will entail acquisition of a 61% stake in IDBI Bank. The first scenario could be a full cash-based transaction while the second would be stock-based and the third could be a hybrid one – entailing cash plus stock. According to the report, “While a cash-based acquisition is strongly EPS and RoE accretive, a stock-based acquisition is BVPS (book value per share) accretive (while being RoE dilutive). In all scenarios, the end-game for KMB should be the full acquisition and amalgamation of IDBI Bank, in our view.” The Japanese investment bank is of the view that scenarios which involve cash are preferable as they would bump-up to RoEs, which are currently depressed due to KMB’s low leverage of ~6x vs 8-9x for large private banks. But this deal may not be without its share of complications, says Nomura. The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> has incrementally not been forthcoming in terms of allowing banks to pick-up stakes in other BFSI businesses, says the report. Therefore, it is unclear how such a transaction would be allowed. The central bank could make an exception Kotak Mahindra Bank is to be eventually merged with IDBI Bank. A merger also is not without its share of complication, even if it is allowed. There is no certainty on how this can impact the share price of Kotak Mahindra Bank even if the merger leads to better financial ratios.

What if Kotak Mahindra Bank acquires IDBI Bank, asks Nomura

The <keyword id="6354572" type="General" weightage="80" keywordseo="cbi" source="Orion">CBI</keyword> has filed an <keyword id="6358015" type="General" weightage="80" keywordseo="fir" source="Orion">FIR</keyword> against telecom infrastructure major <keyword id="95837" type="General" weightage="100" keywordseo="gtl" source="Orion">GTL</keyword> for allegedly diverting a substantial portion of a Rs 4,760 crore loan availed from a consortium of banks led by <keyword id="6357560" type="General" weightage="80" keywordseo="idbi-bank" source="Orion">IDBI Bank</keyword>, officials said. The agency has booked the company, unidentified directors, public officials and vendors under IPC sections related to criminal conspiracy, cheating and provisions of the Prevention of Corruption Act, following a preliminary enquiry which showed that GTL had fraudulently obtained various credit facilities from consortium of banks, they said. According to the FIR, the company allegedly diverted or siphoned off a majority of the loan amount in conspiracy with its vendors, unidentified bank officers, among others. The FIR has alleged <keyword id="1504826" type="General" weightage="80" keywordseo="gtl-limited" source="Orion">GTL Limited</keyword> was extending advances to vendors year on year without supply of material/goods, and eventually these advances were provisioned. "Various vendor companies were created and operated with the malafide intention of siphoning off the bank short term funds and other credit facilities in connivance with borrower i.e. GTL Limited," the FIR has alleged. The IDBI Bank had conducted a special audit of the company in 2011 and raised the issue of suspicious transaction with the vendors. The Economic Offences unit of the agency has found that Reserve Bank of India (RBI) had warned IDBI Bank on April 1, 2016 to "red flag" the account and conduct a forensic audit, but in its response submitted two months later, the bank stated on behalf of the entire consortium lenders not to classify the account as 'Red Flags' and also not to appoint a forensic auditor as it may delay the dues settlement. The RBI reiterated its directive following which a forensic audit was instituted on July 30, 2016. The company was engaged in the business of providing telecom network deployment services, operations and maintenance services professional services, network planning and design services and energy management services to telecom operators in India and international markets. Manoj Tirodkar and Global Holding Corporation Pvt Ltd (GHC) are the promoters of the company, the CBI has said. The CBI has alleged that an amount of Rs 1,213.97 crore (86.84 per cent) is outstanding against four companies -- Acuity Trading Pvt Ltd, Lenity Trading Pvt Ltd, Venerate Trading Pvt Ltd and Vinamara Multitrading Pvt Ltd -- which were given huge advances for supply of material from financial year 2009-10 to 2011-12, but supply orders were completed. "Eventually, Rs 1,213.97 crore was left outstanding towards these four vendors which was gradually provisioned till 2017-18," the FIR alleged. The CBI found that advances were given despite their meagre net worth and their recent incorporation. "The enquiry further revealed that all these vendor companies were incorporated within a short span of less than three months. And the Memorandum of Association (MoA) of these vendors of GTL Limited is exactly the same. There are same corrections in all the MoA's which clearly establishes that all the MoA's have been drafted by the same agency/source," the FIR alleged. During the enquiry of some of these vendors entities were examined. "These directors had no knowledge about the supply made by them to GTL Limited, source of procurement by vendor companies, godown of vendor companies, where was the material being supplied. They also did not have any knowledge of the work that these vendor companies used to do," it said. The 2016 forensic audit of the company showed GTL Limited has made substantial advances for the procurement of material to some of the vendors even though the purchases made from these parties were much lesser. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/tata-motors-in-top-gear-reports-net-profit-of-2958-crore-in-q3-its-first-after-seven-quarters/articleshow/97319081.cms">Tata Motors In Top Gear: Reports net profit of ₹2,958 crore in Q3, its first after seven quarters</a> <a href="https://www.businessinsider.in/stock-market/news/equity-markets-have-usually-been-nervous-ahead-of-budget-but-a-relief-rally-is-likely-post-budget/articleshow/97286146.cms">Equity markets have usually been ‘nervous’ ahead of budget but a relief rally is likely post budget, say analysts</a> <a href="https://www.businessinsider.in/business/corporates/news/maruti-suzukis-q3-net-profit-zooms-133-to-2351-crore-on-lower-input-costs/articleshow/97275909.cms">Maruti Suzuki’s Q3 net profit zooms 133% to ₹2,351 crore on lower input costs</a>

CBI books telecom company GTL for diverting ₹4,760 crore loan availed from IDBI Bank, others

<keyword id="6357560" type="General" weightage="100" keywordseo="idbi-bank" source="Orion">IDBI Bank</keyword> has introduced a <keyword id="2346698" type="General" weightage="20" keywordseo="limited-period" source="Orion">limited period</keyword> special 500 days deposit under the <keyword id="14779347" type="General" weightage="50" keywordseo="amrit-mahotsav-fd" source="Orion">Amrit Mahotsav FD</keyword> scheme, which will offer 6.70 per cent <keyword id="6371181" type="General" weightage="20" keywordseo="interest-rates" source="Orion">interest rates</keyword>. Further, a special bucket of 500 days for US dollar designated FCNR (B) deposits is also introduced offering a peak rate of 3.63 per cent. Meanwhile, the bank has also revised the interest rates on term deposit across various tenors with effect from Monday. The bank is now offering the highest rate of 6.55 per cent on select tenors. Most banks are increasing their deposit rates for boosting deposit to support rising credit off-take as liquidity in the banking system has narrowed. The hike in deposit rates are in line with the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword>'s 50 basis points hike in repo rate in the August monetary policy. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/nft-transactions-to-reach-40-mn-globally-in-5-yrs-amid-scam-threats-report/articleshow/93704271.cms">NFT transactions to reach 40 mn globally in 5 yrs amid scam threats-report</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/pulses-like-urad-moong-arhar-and-oil-seeds-could-get-pricier/articleshow/93702821.cms">After rice, cereals and pulses could get pricier</a>

IDBI Bank revises interest rates on term deposits, introduces limited-period 500-day fixed deposit

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What if Kotak Mahindra Bank acquires IDBI Bank, asks Nomura

BI India Bureau

CBI books telecom company GTL for diverting ₹4,760 crore loan availed from IDBI Bank, others

PTI

IDBI Bank revises interest rates on term deposits, introduces limited-period 500-day fixed deposit

IANS

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