Money & Banking

IDBI unions caution govt against selling balance stake in lender

Our Bureau Mumbai | Updated on February 26, 2020 Published on February 26, 2020

The United Forum of IDBI Officers and Employees has cautioned the government that in case it sells its balance holding in IDBI Bank to private, retail and institutional investors, the public sector character of the bank will be at risk, as the private sector entities who will become the new owners will no longer be interested in catering to the needs of the common man.

Minimum balance charges

Once the government completely sells its balance share holding (46.46 per cent) in IDBI Bank, the forum said that instead of serving the common man and general public, the bank (as a private sector lender) may be forced to collect minimum balance charges and other penalties from the common manto earn more profits.

The Life Insurance Corporation of India (LIC) is now the promoter of IDBI Bank. The state-owned life insurance behemoth completed the acquisition of 51 per cent stake in the bank, which was re-categorised as a private sector bank by the RBI in January last year.

“Private banks will be profit-oriented, not service-oriented...India needs more public sector banks to improve financial inclusion parameters/aspects. Reduction in the number of public sector banks leads to less competition...This is totally against the interest of the common man and general public,” said the forum’s joint convenors, Vithal Koteswara Rao AV and Ratnakar Wankhade, in a letter to the Finance Minister.

The joint convenors emphasised that with LIC and the government together holding 97.46 per cent stake in IDBI Bank, the public has continued to repose faith in the bank, whose deposits stood at ₹2,18,180 crore as on December-end 2019.

In case of privatisation of IDBI Bank, they felt the hard-earned money of the common man could be at great risk.

“There is a need for one strong development financial institution (DFI) in India to cater to the needs of developing India...Obviously, the right choice will be IDBI Bank. The bank should be declared as DFI to take care of corporate lending in a very judicious manner, along with retail banking,” the letter said.

Published on February 26, 2020
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