New Delhi: Days after Parliament repealed the IDBI Act, the Industrial Development Bank of India (IDBI) is believed to have decided to remain a "stand-alone" entity initially and a merger with a big PSU (Public Sector Undertaking) bank may be considered later.

The IDBI board, which met in New Delhi today (Dec 19, 2003), has taken stock of the new situation after the repeal of the IDBI Act to corporatise the country's largest FI and convert it into a universal bank.

"IDBI will continue to function on a stand alone basis now", official sources told reporters, adding there was no move to merge IDBI Bank with the parent DFI as of now. IDBI chairman M Damodaran was not available for comments.

Government has favoured merger of IDBI with a big bank like Punjab National Bank or Canara Bank, but FI sources said such a move would be considered later.

IDBI would comply with Cash Reserve Ratio obligation but would get RBI's forbearance for meeting the Statutory Liquidity Ratio.

Government would infuse additional funds (about Rs 770 crore) in IDBI to enable it to meet the interest differential between its cost of borrowing and cost of lending.

IDBI already has a fixed deposit scheme and a bond issue in the market, from which it plans to raise about Rs 3,000 crore over the next few months.

Moreover, IDBI has also applied to Finance Ministry for approval to raise $ 500 million in external commercial borrowing to assist textile units.

PTI