The Hindu Business Line : LS passes IDBI Bill — `Govt equity not to drop below 51 pc'

THE Lok Sabha today passed the Industrial Development Bank (Transfer of Undertaking and Repeal) Bill, 2002, that would allow the corporatisation of the development financial institution and its conversion into a banking entity.

The passage of the Bill came amidst heated debate after a near embarrassment to the Government that escaped narrowly in the voting on an Opposition-sponsored amendment seeking incorporation of a clause to retain Government holding in the institution above 51 per cent after the proposed restructuring.

With an eventual tie at 38 members each from the Treasury and Opposition benches voting for and against, the amendment was later withdrawn after the Finance Ministry, Mr Jaswant Singh, assured the house that the Government equity would not be brought down below 51 per cent.

The Finance Minister also assured that after the conversion the new banking entity would be governed under the Banking Regulation Act.

Earlier, proposing that the 51 per cent stake would be maintained through an executive order, the Finance Minister said: "if that (executive order) is insufficient, I will come to you again with an amendment.''

The Finance Minister also assured members that that the converted IDBI would also have `development finance' as its major activity and that it would take care of the welfare of the employees. ``The development finance aspect of the IDBI will not be diluted. Development finance will be given principal importance,'' he said.

He also assured that the performance of the new entity would be observed for five years and mid-course corrective measures taken if needed. He also accepted the suggestion that the review exercise should be undertaken after each quarter or at least once in a year so that its impact could be studied quickly.

Mr Singh did not agree with the opposition's view that IDBI would not be able to recover non-performing assets worth Rs 15,000 crore.

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