Further, the paper is of the view that the while the extent of public ownership is an important issue with reference to corporatisation, a decision on the same would have to be taken by the Centre and Parliament.

"The Narasimham Committee had recommended that in order to provide the much-needed flexibility in its operation, IDBI should be corporatised and converted into a joint stock company under the Companies Act on the lines of ICICI, IFCI and IIBI. The Khan Working Group (KWG) also echoed similar sentiments and also advocated corporatisation of SFCs. Both these proposals deserve to be accepted and acted uponand, in fact, a similar route may be recommended for all RFIs," says the discussion paper.

The case for corporatisation has been justified on the grounds that with both the Narasimham Committee and KWG advocating mergers and acquisitions (M&A) between banks and DFIs, such M&As are best achieved through flexibility available in corporate environment like under the Companies Act than under other arrangements. "Hence, the possibility of corporatising all statutory bodies engaged in purveying credit including state level institutions needs to be expedited," the paper says.

The paper, however, added: "It must be made clear that corporatisation does not imply taking view on the extent of public ownership. Without prejudice to the extent of public ownership, these institutions could certainly be converted into companies under Companies Act. The extent of public ownership is, of course, also an important issue, on which necessary decisions would have be to be taken by the government and the parliament."

Mentionhas also been made of delinking the Small Industries Development Bank of India (Sidbi) from IDBI as also that of the Reserve Bank from SFCs enabling the former to concentrate on regulation and supervision.