IIBI Targets To Cut 50-70% Of Staff Before IDBI Merger

New Delhi, Feb 26: | Updated: Feb 27 2004, 05:30am hrs
Industrial Investment Bank of India (IIBI), the ailing Kolkata-based FI, has obtained Rs 143 crore from the government to clean up its books and cut manpower by 50-70 per cent before it is merged with IDBI.

IIBI has been a victim of circumstances. There is no chance of it existing on a stand-alone basis... My assessment is that it will be merged with a financial institution or bank, UBI chairman Madhukar, who is also overseeing IIBIs operations, said here on Friday.

Although he declined to comment on the acquirer bank, sources in the finance ministry say that decks are being cleared for a smooth merger of IIBI with IDBI, which is being transformed into a banking company with focus on developmental finance.

Mr Madhukar said the government has provided Rs 143 crore for IIBI in the budget. A portion of the funds would be used for provisioning for bad loans and the remaining would go to the acquirer bank.

IIBI is working hard to cut costs and reduce its non-performing assets, he said.

The FI expects to cut its staff strength by 50-70 per cent through a voluntary retirement scheme, Mr Madhukar said.

IIBI has introduced a VRS for its 266 employees 133 officers, 71 in class-III and 62 class-IV grade, which was not in conformity with that of Indian Banks Associations VRS for bank employees.

Employees Union of IIBI had opposed the proposal to merge the FI with IDBI and asked the government to defer the proposed discriminatory voluntary retirement scheme.

In separate letters to Prime Minister and finance minister a few days ago, the IIBI officers association said, The inaction on the part of ministry of finance right from inception of IIBI led to its extinction slowly and silently.