IDBI climbed 3.27% to Rs 34.75 in morning trades following reports that the parliamentary standing committee on finance has recommended the conversion of the term lending institution into a bank.

Substantial volumes of close to 2 lakh IDBI shares were registered on BSE till 10:20 IST. The stock has now risen 104% from Rs 17.05 on 7 May 2003.

Reports have stated that the parliamentary standing committee on finance has cleared the repeal of the IDBI Act and has mooted the corporatisation of the institution including its conversion into a bank.

Reports also suggest that the committee has recommended a five-year tax holiday in addition to the sops proposed by the government for IDBI. The proposal is expected to come up for clearance in the monsoon session of Parliament.

In fact, IDBI was, in the last one-and-a-half month, boosted two-fold on reports that the restructuring packages for state-run financial institution would be finalised by the Centre shortly. IDBI, last year, was plagued by reports that it was under financial stress and the Centre had then set out to bail out the big lender whose funds were caught in many a core sector dead-end.

But things are looking up for the institution now as it has started receiving old debts from sick companies in the steel and textile industries, which are witnessing a revival.

IDBI has already forayed into a key segment like the housing finance business. It acquired the entire shareholding of Rs 49.98 crore in Tata Homefinance on 2 June 2003.

The Securitisation Act enacted in November 2002 has proved a boon to term-lending institutions. These can now attach assets of defaulting borrowers without having to go to the court for the purpose.

Last week, there were reports that the company, in a bid to recover Rs 1,459 crore under the Securitisation Act, issued notices to 41 defaulters. IDBI has already seized the assets of Suman Motels and Ganesh Benzoplast under the Act. IDBIs non-performing assets (NPAs) stood at Rs 4,287 crore as on 31 March 2003.

IDBI is planning to take action against 31 borrowers, involving a principal amount of Rs 822 crore. Of these, 20 borrowers have approached for amicable settlement of dues and a few of them have submitted one-time settlement (OTS) proposals.

For Q4 ended 31 March 2003, IDBI registered a 15% rise in net profit to Rs 209 crore (Rs 182 crore) on a marginal 0.6% increase in total income to Rs 1,902 crore (Rs 1,891 crore). The board has also recommended a dividend of Rs 1.50 per share for the FY 2002-03.