IDBI Ltd, the new banking entity which will come into existence on October 1, was registered with the Registrar of Companies on September 24. IDBI Ltd will take over the assets and liabilities of Industrial Development Bank of India, which is expected to have an authorised capital of Rs 1,250 crore (Rs 12.5 billion).

Sources said the finance ministry cleared the articles of association of the new company last week paving the way for registration with the registrar of companies in Mumbai.

In December 2003, Parliament had cleared the repeal of the IDBI Act and corporatised the institution enabling it to undertake banking activity.

Since then, the IDBI board has cleared a proposal to merge its subsidiary IDBI Bank with the institution. The merger was expected to take sometime.

Maintenance of cash reserve ratio prescribed by the RBI will not be a problem for the merged entity as the institution has already provided for it, said industry sources. On the SLR front, the entity has received a five- year holiday from the government, he added.

The Rs 9,000 crore (Rs 90 billion) Stressed Asset Stabilisation Fund formed by the government will work as a trust managed by government officials. Initially, IDBI officials will be deputed to carry on the operations. Industry sources said 634 stressed cases have been identified and Dabhol tops the list with accruals of Rs 1,200 crore (Rs 12 billion).

Finance ministry officials also said the government is firm on its decision to merge financial institution IIBI Ltd with IDBI after transferring the bad assets of the Kolkata-headquartered institution to an asset reconstruction company.

They added that there has, however, been no decision on the future of IFCI Ltd. The boards of IFCI Ltd and Punjab National Bank had earlier this year cleared proposals to merge the FI with the Delhi-headquartered bank.

Meanwhile, there were demands from various quarters, including IFCI employees, to merge it with IDBI.