Infrastructure Development Finance Company (IDFC) on Friday said it will continue to provide more in the run-up to launch its bank and the process of demerger of the group's financial businesses into the lender will take up to nine months.
"We will keep building provisions over the next 12 months, our objective is to make sure that there are no significant negative surprises when we become a bank in terms of asset quality issues," company's Managing Director and Chief Executive Vikram Limaye told reporters.
He said the issues surrounding the infrastructure lending the company's mainstay, are still not resolved and there was no major activity in the first half of the fiscal.
A whopping 459 per cent jump in provisions in the second quarter at Rs 281 crore adversely impacted net profit for the quarter, which was down 14 per cent at Rs 421 crore.
On the proposed demerger, Limaye said this is in line with the guidelines which require getting all the financial businesses under the bank.
It will take 6-9 months to get the requisite approvals for the demerger and the process will be initiated from January, Limaye said, maintaining that the company is sticking to October 1, 2015 deadline for operationalising the bank.
"The court process is expected to take anywhere between six and nine months after the process formally starts in around next January," he said.
IDFC, which along with microlender has been granted the in-principle nod by the Reserve Bank to start a full-fledged bank, has started hiring for the banking foray, Limaye said, adding senior management is already in place.
Now, each vertical head is building the team and the hiring is being in stages so that the costs do not rise up, he said.
Group chief financial officer Sunil Kakar said the company will be hiring around 1,500 more men before the bank gets operationalised and the majority of these will be in next fiscal.
Limaye said the lender will continue picking up assets which qualify as priority sector lending (PSL) in the run-up to the operationalising the bank.
"In the next 11 months before we operationalise the bank, we will obviously be engaged in figuring out how we mobilise priority sector assets and those we will book in the NBFC for now," Limaye said.
The IDFC scrip was trading 3.50 per cent up at Rs 153.90 on the BSE, as against the 1.26 per cent rise in the broader Sensex at 1355 hrs.
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