IDBI Bank to set off Rs 45,586-cr accumulated losses against balance in securities premium account

New Delhi: LIC-controlled IDBI Bank will set off its accumulated losses worth Rs 45,586 crore against the balance in the securities premium account, according to the bank's draft scheme.

Its accumulated losses (or debit balance of profit or loss account) at the end of March 31, 2020, stood at Rs 45,586 crore. And, they were at Rs 44,739 crore as on December 31, 2020.

The accumulated losses as at March 31, 2021, shall be ascertained after the audited financial statements are approved by the bank's board, said the lender, as per the draft scheme addressed to its shareholders for setting off the accumulated losses.

The bank's authorised share capital is Rs 25,000 crore.

The issued, subscribed and paid-up share capital is worth Rs 10,752.40 crore and the security premium is of Rs 50,732.27 crore.

IDBI Bank said the balance standing to the credit of securities premium account of the bank as per audited financial statements for FY20 and as on April 1, 2020, is Rs 49,669 crore.

The said the balance as on December 31, 2020, stood at Rs 50,718 crore as per the unaudited financial statements.

"The balance standing to the credit of securities premium account as on March 31, 2021, shall be ascertained after the audited financial statements are approved by the board of directors of the bank," it added.

Last month, its board had approved a proposal of setting off the lender's accumulated losses by April 1, 2021, in full or partially, by using the balance in the securities premium account.

Giving reasons for the move, the lender had said the accumulated losses have wiped off its value represented by the share capital.

"In view of the accumulated losses, the distributable items, in terms of RBI's notification dated February 2017, are negative, and the bank is not eligible to make coupon payment of AT (additional tier)-1 bonds," it had said.

This is affecting the bank's plan to raise AT1 bonds in the near future, it said adding that it believes reducing the share capital is the most practical and economically efficient option so as to present a true and fair view of the financial position of the bank.

Representation of true value would benefit members as their holding will yield better value and also enable the bank to explore opportunities to benefit the members, including in the form of dividend payout within a reasonable timeframe, IDBI Bank had said.