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IDBI Bank has raised upper tier-II bonds (long duration of 15 years) of

Rs 860 crore earlier this month at 9.5 per cent to fund its balance sheet growth which will mostly be in the agri-business so that the priority sector requirements of the bank are met by March 2011.

The bank also has a medium term note (MTN) programme for an overseas bond issue of $1 billion, a part of which may be raised by September later this year.

The public sector bank posted an increase in net profit of 58 per cent to

Rs 454 crore, thanks to a robust growth in the net interest income.

The NII rose by 68 per cent to Rs 1,204 crore for the third quarter ended December 31,2010.

The fee-based income during the quarter increased to Rs 359 crore. The bank also improved its net interest margin to 2.28 per cent from 1.59 a year back.

“We will be slowing our credit growth to about 10 per cent so that we can improve our net interest margins further by exploring refinance opportunities from SIDBI, NABARD, and IFCL and down selling some of the assets,” said RM Malla, chairman and managing director, IDBI Bank, in a press conference, on Thursday.

The advances of the bank increased by 21 per cent to Rs 1,34,491 crore and the deposit of the bank increased by Rs 1,50,239 crore posting a growth of 20 per cent. The aggregate assets of the bank was at Rs2,21,098 crore at the end of the third quarter.

IDBI Bank is also raising retail deposits with competitive rates of interest and the fixed deposits contracted post January 1, 2011, will not attract any premature penalty.

They are offering one of the highest rates in the industry with interest rates going up to 11 per cent for 1,100 days.

The one-year deposits of the bank are attracting an interest rate of 9.25 per cent with senior citizens getting about 50 to 70 basis points over and above the normal rates.