ASSIGNMENT

OF
BUSINESS STRATEGY
ON THE TOPIC
STRATEGY OF IDBI BANK

Submitted to: Submitted by:

Mr. Gagan Gulati Pramit Rastogi
Assistant Professor
17FLICDDN01083
The ICFAI University BBA llb. (hons.) 2nd
year
Dehradun Section: B
IDBI BANK
STRATEGY:

1. Turnaround Strategy:

According to Dictionary of Marketing, Turnaround means ‘making a company profitable again’.

Turnaround strategy is applicable to the loss making business unit. It is the act of making a
company profitable again. Turnaround strategy is a revival measure for overcoming the problem of
industrial sickness. It is a strategy to convert a loss making industrial unit to a profitable one.

Turnaround is a restructuring process that converts the loss-making company into a profitable one.
It brings the industrial unit into its original position and stabilize its performance.

Implementation plays an important role in turnaround management. The success of the turnaround
strategy depends on the commitment of the top level management. A turnaround is essential to the
survival of a failing business. Turnaround is a sustained positive change in the performance of a
business to obtain desired results. A successful turnaround is a complex procedure that requires a
strong management team and sound business core.

The turnaround also requires the leadership of a competent management, capital, and trust and
support of the company employees and shareholders

IMPLICATION: In 2017 the Bank has launched Project Nishchay to drive its strategic
transformation through focused interventions in four major areas, viz. (i) Asset Utilization,
(ii) Revenue Maximization, (iii) Operating Cost Rationalization, and (iv) Manpower
Planning. As a part of its comprehensive turnaround strategy, the Bank has been working
towards realignment of its business mix in favour of retail and priority sector lending
business while limiting growth in its corporate loan book, especially in large corporate
segment. This strategy has been adopted in pursuance with a capital light business model as
it would facilitate the Bank to reduce its Risk Weighted Assets (RWAs) as also help in
improving the quality of the balance sheet. With a view to optimizing its capital, your Bank
has significantly reduced the RWAs by 18% during FY 2017-18 by reducing exposure to
 low-rated corporate clients, ensuring incremental exposure in regulatory retail portfolio,
enhancing cash security margin wherever feasible, data cleaning, etc.

OUTCOME:

Profitability

 Operating profit (OP) improves by 71% to Rs.7,907 crore during FY 2018 from Rs.4,619
crore during FY 2017 considering Strategic Sale.

 Net Interest Income maintained at Rs.5,640 crore in FY 2018 against Rs.5,752 crore in FY
2017 despite reduction of standard Advances and higher NPAs.

 Net Interest Margin (NIM) improved by 0.19% and stood at 1.81% as on March 31,2018
compared to 1.62% as on March 31,2017.

 Operating Expenditure reduced by 7.72% to Rs.4,744 crore for FY 2018 from Rs.5,141
crore for FY 2017

 Interest Expenditure reduced by 21.11% to Rs.17,386 crore for YE March 31, 2018 from
Rs.22,040 crore for YE March 31, 2017.

1. Cost leadership:

Porter's generic strategies are ways of gaining competitive advantage – in other words, developing
the "edge" that gets you the sale and takes it away from your competitors. There are two main ways
of achieving this within a Cost Leadership strategy:

 Increasing profits by reducing costs, while charging industry-average prices.

 Increasing market share by charging lower prices, while still making a reasonable profit on
each sale because you've reduced costs

IMPLICATION: To attract prospective home loan customers with good credit standing, IDBI
Bank is planning to come up with a product whereby concessions on interest rates will get deeper as
their credit score gets higher. The public sector bank is working on risk-based pricing for home
loans based on customers’ credit score. “A home loan customer with credit score between 700 and
750 will get some concession on the card rate. Those with credit scores between 750 and 800, and
above 800 will get further concessions.Bank is also providing lower interest for the woman.

Loan Amount IDBI Bank Home Loan Rate for Female Borrower
Interest Rate

Upto Rs. 25 Lakh 8.40% 8.35%

Rs. 25 Lakh – 75 Lakh 8.55% 8.50%

OUTCOME:

It leads to the increase in profits and customer base in the of the bank. It leads to the customer
loyalty. IDBI reduces down interest rate of loans comparatively to competitors and increased
interest share in savings accounts to retain maximum customer. As that was phase of private banks,
competition was merely high to attract customers and which leads to the increase in profit that
increases company`s market value. IDBI manages to retain customer and succeed to gain maximum
profit share as well as maximum market share.

1. Ramp up Corporate Social Responsibility(CSR)-

Corporate Social Responsibility is the integration of socially beneficial programs and practices into
a corporation's business model and culture. CSR aims to increase long-term profits for online and
offline businesses by enabling them to become more efficient and attract positive attention for their
efforts.Companies stand to benefit from the implementation of CSR strategies.

IMPLICATION: IDBI, in association with National Association for the Blind, established
the NAB-IDBI Polytechnic for the Blind at Ambernath, Maharashtra in the year 1981. True
to its image of a socially responsive organisation, IDBI constructed houses and access
roads in Shirsal Tanda village in Latur, Maharashtra that was affected by a devastating
earthquake in 1993. IDBI displayed the same level of responsiveness in times of natural
calamities by providing immediate disaster relief in earthquake-hit areas of Gujarat (2001),
tsunami-hit southern Indian states (2004), flash floods-hit state of Uttarakhand (2013) and
the cyclone-hit Odisha (2013). Recently IDBI Bank had contributed ₹3.27 crore to Kerala
Industries Distress Relief Fund for the flood-affected in the State.
OUTCOME: The CSR initiatives undertaken by the Bank had aligned with the vision of
‘being the most preferred and trusted bank’. The Bank, through its CSR initiatives aims to
focus on holistic development of target communities. This have helped the bank to create
value and make a material, visible and lasting difference to the society. It had also
developed a positive image of the Bank in the minds of the stakeholders.

CONCLUSION:

From the different strategy it is concluded that to maintain the position in the market the
company have to perform different strategy to maintain its goodwill and generate profit in
the uncertain market. For sustaining in the high uncertain market environment the company
had to use different strategies as the IDBI bank had used different strategies such as
turnaround strategy, CSR strategy and cost leadership strategy. The bank through
turnaround strategy leads to make the loss making business to profitable again like in this
the bank had stated the project nishchya as its turnaround strategy. After through its cost
leadership strategy it is able to attract the customer by providing low home loan rate and
low rate to the female for taking loan. At last CSR strategy helping the company to made its
goodwill which will help in creating the customer faith in the company by contributing the
society.
 BIBLOGRAPHY:

 https://www.thehindubusinessline.com/money-and-banking/To-go-after-bad-loans-
IDBI-Bank-charts-out-3-pronged-strategy/article20677383.ece

 https://www.goodreturns.in/company/idbi-bank/director-report.html

 http://www.yourarticlelibrary.com/business/why-turnaround-strategy-is-essential-for-the-
survival-of-a-failing-business-explained/7528

 https://www.apnnews.com/idbi-bank-exhibits-improved-business-performance-on-course-for-
turnaround/

 https://www.idbi.com/pdf/CSR-Policy.pdf

 https://www.idbi.com/corporate-social-responsibility.asp