IDBI plans to sell home fin arm

IDBI plans to sell home fin arm
IDBI Bank is planning to sell its Pune-based wholly-owned subsidiary, IDBI Homefinance (IHFL), according to a person familiar with the development. A proposal to sell the home finance subsidiary is expected to be taken up by the board of IDBI Bank shortly, the source said. The book value of IHFL at the end of March 2007 was Rs 290 crore. Market watchers say the book value would have increased slightly now. The proposed sale is likely to have been prompted by a view that a separate subsidiary is not required for mortgage lending when the same business is also undertaken at IDBI Bank.
IHFL was previously Tata Home Finance. The name of the mortgage lender was changed as it was acquired by IDBI Bank in September 2003.
IHFL's home loan portfolio as on March 31, 2008 was Rs 2,710 crore, up Rs 563 crore from a year earlier. The mortgage lender, which has 18 branches in major cities, had reported a net profit of Rs 30 crore for 2007-08.
IDBI bank is likely to give the mandate to IDBI Capital Market Services for finding a suitor. When contacted, a senior official of IDBI Bank said, "We are examining various options. We have still not made up our mind."
Recently, Melwyn Rego who was heading IHFL was transferred back to the bank's domestic resources development (DRD) department. MH Kulkarni has now taken over as the MD & CEO of IHFL.
Interestingly, Tata Capital, the latest entrant in the home loan segment,will be shortly filing its application with the National Housing Board to start its housing finance business.