The All India Bank Officers’ Association said the Centre’s move to sell family silver by reducing its stake in IDBI Bank to below 50 per cent will be resisted by it through ‘all forms of agitation’.
Emphasising that IDBI Bank is a public sector bank and the government should maintain its stake in it at 52 per cent or more, S Nagarajan, General Secretary of the Association, said the government’s proposed move undermines its commitment to maintain the public sector character of state-run banks.
Nagarajan felt that once the government manages to bring down its stake to below 50 per cent in IDBI Bank, it will push for consolidation among public sector banks, a move that the Association — the second-largest organisation of bank officers working in public, private, regional, rural and co-operative banks — will fight tooth and nail.
As at December-end 2015, the government held 80.16 per cent stake in IDBI Bank.
In his Budget speech, Finance Minister Arun Jaitley said: “Our public sector banks will have to be strong and competitive. The Banks Board Bureau will be operationalised during 2016-17 and a road map for consolidation of public sector banks will be spelt out. “The process of transformation of IDBI Bank has already started. Government will take it forward and also consider the option of reducing its stake to below 50 per cent.”
Many interested In fact, International Finance Corporation (a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets), CDC (UK’s development financial institution and wholly owned by the government) and GIC (wholly-owned by the Singapore government), among others, have evinced interest in picking up strategic stakes in IDBI Bank, according to top bank officials.In late September 2015, Jaitley reportedly told a TV channel that the government could consider the Axis Bank model for holding a major stake in IDBI Bank.
The government holds major shareholding (31.01 per cent as at December-end 2015) in Axis Bank via its instrumentalities, including the Life Insurance Corporation of India (14.99 per cent); the Administrator of the Specified Undertaking of the Unit Trust of India (11.98 per cent); General Insurance Corporation of India (1.75 per cent); and New India Assurance Company (1.13 per cent).
Referring to the government’s move to spell out a roadmap for consolidation of public sector banks, Nagarajan said:
“Our nation needs expansion of banking as 51 per cent of the population is unable to access basic banking services.
"We need more banks in the public sector.”