The Centre must reconsider its decision to bring down the equity holding in IDBI Bank Ltd to less than 51 per cent, two top bank employee associations have said.
In a joint letter to the Union Finance Minister, the All India Bank Employees’ Association (AIBEA) and the All India Bank Officers’ Association (AIBOA) have expressed "strong protest" to the decision, stating that it will have implications on the public sector character of the bank.
"While we welcome the contribution of LIC into the capital of IDBI Bank, you will appreciate that it cannot be allowed to hold 51 per cent because this would reduce the Government’s share to less than 51 per cent which would go against the Articles of Association of the bank and also the solemn assurance to Parliament made in 2003 during the then NDA/BJP regime when Shri Vajpayee was the Prime Minister," said the letter jointly signed by AIBEA General Secretary C H Venkatachalam and AIBOA General Secretary S Nagarajan.
When IDBI was converted as IDBI Bank, the Government had given an assurance in Parliament that at all times they would hold a minimum of 51 per cent of the capital in IDBI Bank. Accordingly, this was duly incorporated in the Articles of Association of IDBI Bank which provides that Government will maintain 51 per cent of the equity at all times, the joint letter highlighted.
Tough measures
The need for additional capital for the bank arises out of its huge bad loans and hence urgent measures to recover the bad loans are needed to address the issue of capital constraints of the bank, the letter said.
"We strongly urge upon the Government to take tough measures to recover the bad loans of the bank," the letter added.