IFCI employees recommend four-way DFIs' merger

The employees of IFCI, opposing the government's move to merge the institution with Punjab National Bank, have proposed a merger of four development financial institutions - IFCI, Industrial Development Bank of India, IIBI and Infrastructure Development Finance Company.

The IFCI Officers and Employees Association has also asked industry bodies such as Ficci and CII to take up the issue of merger of the four institutions with the finance minister and the prime minister.

In a letter to banking secretary N S Sisodia, the union said the creation of a single institution could have better focus, wider national reach, rationalised manpower, diversified portfolio and can also bring down non performing assets and end inter-institutional competition.

"Consolidation of DFIs could be attempted through the merger of IDBI, IFCI, IIBI and IDFC in order to form a very strong, healthy, broad-based and diversified mega DFI, which will provide development financing to projects in industry and infrastructure sectors," the association said.

The association suggested that the merged entity could be provided with funds at concessional rate and allowed to accept cheaper deposits, so that it can withstand global economic pressures.

It said the merged institution could also operate such as special purpose vehicles with mandate to function as "economy multiplier" and not as a profit centre - a model which China has adopted long time back.