IDBI Bank has decided not to partner with any other entity for its mutual fund business. It has solely launched its IDBI Asset Management with an initial capital investment of Rs. 25 crore. The asset management company (AMC) will first hit the market with index funds and a few debt fund schemes.

Speaking on the decision to go solo in the business, DBI Bank chairman and managing director Yogesh Agarwal said: "Fortis, our insurance partner, had offered to partner us in AMC business but we declined the offer. But we will review prospects of partnership in future. Another option was to acquire a mutual fund. But we felt it was better to have a greenfied project."

Krishnamurthy Vijayan, previously the head of JP Morgan AMC in India has been appointed as the MD and CEO of the AMC.

IDBI is not a new player in the mutual fund business. The bank had earlier entered the industry in a 50: 50 joint venture with US based Principal Group in 1999. But it made an exit from the business in 2002 after selling its stakes to Principal.

"We did not see much value addition in the partnership at that point of time and thus we exited," said Agarwal.

Speaking on its current decision he said, "At that time, IDBI was not well established as a retail player. But now we have a range of retail products like home loans and insurance and thus we felt there is a need to include mutual fund products within our umbrella of retail product."

Speaking about the capital infusion plans, Agarwal said that the bank has asked for Rs. 8000 crore worth capital from the Government in the next three years. It is also in the list of public sector banks receiving a facelift from the Government this year in the form of capital infusion worth Rs. 16, 500 crore along with Bank of Maharashtra, Allahabad Bank, Central Bank of India, Dena Bank, Indian Overseas Bank, Syndicate Bank, UCO Bank, Vijaya Bank and Canara Bank.