Four IDFC executives to stay on

Follow-up of last week's meet with finmin officials.

The Infrastructure Development Finance Company (IDFC) realignment controversy seems to be easing out with at least four of the seven senior executives who resigned in the last few weeks agreeing to reconsider their decision.

While some executives had communicated their decision to the IDFC management verbally, at least one had stated his position to the finance ministry through e-mail, officials told Business Standard.

The move follows a meeting last week between senior IDFC executives and finance ministry officials, who stated that the company would retain its private sector character and the Reserve Bank of India would sell its 15 per cent stake to the government.

Despite several attempts, IDFC CEO and Managing Director Nasser Munjee could not be contacted. It could not be ascertained whether Munjee had also withdrawn his resignation. The matter is, however, expected to be discussed at the IDFC board meeting on April 20.

Seven IDFC executives had put in their papers after the finance ministry had sent a letter to the management saying the government was planning to "realign" the financial institution, set up in 1997, to increase the credit flow to the infrastructure sector.

"There was some speculation due to the use of the word 'realign'. IDFC executives have been told that the private sector character of the institution will be retained. The government has dispelled all fears, including those on remuneration, over the realignment, which will only involve the sale of the central bank's stake to the government," a finance ministry official said.

The transfer of the RBI's 15 per cent stake to the government will take place through a cash-neutral deal.

The apex bank would subscribe to bonds issued by the government in return for transferring shares, officials said without disclosing the timing of the deal. The valuation exercise has not been undertaken so far.

The IDFC board is also expected to discuss the possibility of an initial public offer in line with a clause in the shareholders' agreement requiring the exit of foreign investors holding 40 per cent in the company. The public offer was to be made on IDFC completing five years of operation.