Reliable sources said finance secretary S Narayan and banking secretary Vineeta Rai represented the government in the oral evidence taken by the committee on the Industrial Development Bank (Transfer of Undertaking and Repeal) Bill, 2002. The committee was reportedly given the assurance that it did not wish to dilute the role of the financial institution through the legislation, but only facilitate its continuation by access to low-cost funds.
The broad impression was that committee members were open to higher awareness on the purpose behind converting the FI into a universal bank, sources in the institution said. The panel took oral evidence from the FI brass earlier in the day.
The sources said there was more concern on matters pertaining to staff interests, reassurance on maintaining continuity of purpose, etc., during the hearing with IDBI representatives. The stress in the case of the government was on upholding the objective of development financing and whether privatisation was the ultimate end.
The sources said members may ultimately insist on certain changes in the bill so that the government retains at least 51 per cent stake in the new entity. Its holding currently stands at 58 per cent.
Officials said the government on its part was clear that IDBI would continue to be an industry-oriented institution. The move for conversion into a bank was primarily aimed at allowing it access to low-cost deposits from individuals and corporate entities, the officials said. There was need for at least a few large universal bank-type organisations in the country ICICI Bank had already donned that mantle while the State Bank of India was also readying to take that route.
With an overall positive note emanating from the sittings, the general feeling in both the finance ministry and the financial institution seems one of optimism that the committee would submit its report on the bill within the budget session. In case there are few radical suggestions, the government would even try to push the bill through in the second half of the session, sources averred.