Public sector lender, IDBI Bank will be seeking refinance provided by Small Industries Development Bank of India (SIDBI). The bank is planning to seek refinance worth Rs 2000 crore by March 2011.
"Instead of borrowing in market at higher rate (the liquidity crunch has pushed rate for short-term funds), it makes sense to tap refinance facility against the existing loan portfolio," said P Sitaram, chief financial officer of IDBI Bank.
Recourse to refinance is not under cash reserve ratio (CRR) and statutory liquidity ratio (SLR) norms and it also helps in balancing asset liability mismatch. Sitaram also said that since IDBI was converted into a bank only six years back, it has a low share of CASA ratio thereby causing frequent asset liability mismatch.
The bank is planning to increase its CASA ratio to 20% by March next year. Most of the commercial banks have CASA ratio nearing 30%.
Sidbi and NHB, Nabard and EXIM Bank operate refinance window.