IDBI Bank-LIC stake deal: Bank employees' union asks govt to retain at least 51% stake

Vadodara: Opposing the probable majority stake sale by the government in IDBI Bank to LIC, bank union AIBEA has asked the Centre not to go back on its commitment on the debt-laden bank, and retain at least 51 percent stake. In a letter to finance minister Piyush Goyal on Friday, All India Banks Employees Association (AIBEA) general secretary CH Venkatachalam also asked the government to come forward with adequate capital infusion in the bank. It can be noted that according to media reports the Life Insurance Corporation of India (LIC) is planning to acquire a majority stake in IDBI Bank, which is likely to reduce the government’s stake to below 51 percent. LIC currently holds 10.8 percent in the bank. [caption id=“attachment_4598501” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] “…when the Atal Bihari Vajpayee-led government brought the enactment in 2003 to convert IDBI into IDBI Bank, the government made a categorical assurance on the floor of the Parliament that at all times it shall maintain not less than 51 percent equity holding in the new setup of IDBI Bank. On the basis of this assurance, the Bill was approved by the Parliament,” Venkatachalam said in the letter. Now, due to the huge pile of bad loans in IDBI Bank, the need has arisen to augment additional capital to the bank, he added. Venkatachalam reasoned that if the bad loans are on account of malafide decisions of bank executives, they must be taken to task, and if this is due to change in economic scenario, with huge infrastructure loans turning bad today, the government must provide additional capital. “But in any case, the government should not use the present plight of the bank to reduce its stake to less than 51 percent, which would amount to shirking its commitment to the Parliament and to the nation,” he said. He pointed out that LIC itself is saddled with a huge portfolio of non-performing assets and all loss-making institutions can not be bailed out by LIC at the cost of the interest of the common people who are investors in LIC. Venkatachalam also said that instead of taking stringent measures to address this vital problem, adding further investments in a bank which is facing huge bad loans and is making losses, is not a fair proposition. “The government must come forward with an adequate capital contribution (in IDBI) as was done in the past,” he added.