‘Raid on ICICI Bank just not possible’

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New Delhi, Oct 14: Ruling out the possibility of a corporate raid on ICICI Bank through hammering down of its share price, Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said it is not possible for just anyone to take over the management due to strong regulations in India.

“There are limits (shares) on what can be bought by an individual. Ability to change management is also dependent on lots of regulatory approvals, so I don’t think people should have any fear that all of a sudden ICICI Bank may change management because of stock manipulation,” he said. On whether nationalised banks are more capable of handling market pressures due to backing of the government, he said, “It is true that in public sector banks nobody can change the management because we are not going to reduce the government ownership below 51%...so the trading in stocks only remains up to 49%.”

He added, “In a private sector bank there is no freeze on majority ownership so stocks would be traded more freely. Whether that leads to instability or not depends on market conditions. I don’t see that very crucial for the actual stability of the banking system.”

Both private and public sector banks are subjected to same regulation and supervision, he said, adding, “when I am saying that the banking system is strong as judged by the Finance Ministry and the RBI, that applies to both. As far as the stability of the banks are concerned, the private sector banks that we are supervising are as sound”.

ICICI Bank management had earlier alleged that “vested interests” were indulging in malicious rumours to pull down the bank but ruled out that any banking rival was behind it.

Pointing out that the fundamental thing is the stability of the banking system and of ICICI Bank, Ahluwalia said, “if there is any temporary shortage of liquidity, RBI can make available liquidity since they are quite convinced that the bank (ICICI) is perfectly sound”. As regards the specific complaints of hammering down of stocks by the ICICI management, he said, the stock price manipulation is illegal and if somebody has been manipulating the stock it would be the job of Sebi to look into the matter.