IDBI Corporatising Plan In Full Swing

New Delhi, Sept 17: | Updated: Sep 18 2003, 05:30am hrs
Preparatory work for transforming the Industrial and Development Bank of India (IDBI) into a universal bank was apace in anticipation of passage of the bill pending before Parliament. Banking secretary NS Sisodia told FE that we need not wait further once the IDBI bill is passed, adding that the government and the bank were going ahead with all preliminary work needed for corporatising IDBI.

The bill failed to get through in the monsoon session, though finance minister Jaswant Singh had warned even on the penultimate day of the session that this could have serious consequences for the financial institution. Later, he dismissed the possibility of taking the Ordinance route for the purpose, though.

The Industrial Development Bank of India (IDBI) (Transfer of Undertaking and Repeal) Bill, 2002, was tabled in the monsoon session last year.

While Mr Sisodia gave no further details, IDBI officials pointed out that delay in the bill had nearly derailed the process of installing a part-time chairman and a full-fledged CEO for the new entity.

The CEO search committee headed by Reserve Bank deputy governor Rakesh Mohan last week completed its rounds of meeting prospective candidates who would be offered a market-linked compensation, as per the advertisement put out in July.

IDBI officials, though, were sceptical about the premature exercise, averring that till the new entity came about, such a post could not be set up, let alone filled. The existing IDBI Act had no provision for splitting the post of chairman-cum-managing director, so any announcement in this regard could invite challenge.

Finance ministry officials noted that IDBI was at present in suspended animation anyway. Operationally, it is already in hibernation mode with infrastructure and other development lending totally on hold. They regretted the fact that cost-cutting exercises like the voluntary retirement scheme (VRS) were not being introduced to prune the workforce.

IDBI officials said with the existing staff there was no way commercial bankers could be brought on board yet to man the 50-odd additional branches proposed post-conversion. However, VRS was not being examined as an option just now.