IFCI board right in rejecting bid: FM

Says it will get more suitors in rebidding process

Union Finance Minister P Chidambaram today said the board Industrial Finance Corporation of India's (IFCI) board of directors has taken an appropriate decision in rejecting the bid submitted by a consortium of Sterlite-Morgan Stanley.

IFCI had planned to raise funds to manage its non-performing assets. Sterlite Industries and Morgan Stanley had offered to buy 26 per cent stake and also sought management control. However, as negotiations failed, IFCI turned down the bid.

"There was a single bid and it was conditional. The IFCI board's decision to reject the bid... is correct," Chidambaram told reporters.

He said that there would be more bids in the rebidding process. "I am sure when the rebid process begins, there will be more bidders who will conform to the request for proposal documents."

However, Chidambaram refused to comment on the rebid process. He was in Bangalore to mark the opening of Vijaya Bank's 1,000th branch and launch the new brand identity of Canara Bank.

In his address, he said the financial sector, especially the public sector banks, should aid India's economic growth. "Last year, the country's GDP growth rate was 9.4 per cent. The country has the capacity to cross the 10 per cent-mark. The financial sector can help the nation in crossing this mark."

He further said, "Every player in financial sector should grow at a rate proportionate to the GDP growth. Banks, mutual funds, provident funds and the insurance sector should grow equally and share the burden of financing the growth."

According to him, nationalised banks have a larger role in ensuring higher economic growth. "Only the nationalised banks have the necessary reach for inclusive growth. If the nation has to develop, the bottom of the pyramid, like the Dalits, minorities and the scheduled castes and tribes, should have access to financial products," he contended.

He also emphasised the need for the public sector banks to consolidate their operations.

"Consolidation has to happen in the banking sector. When external forces impose their choices upon you, there wouldn't be much of a choice. I know there is opposition in the banking sector against consolidation...How long can you resist consolidation?" he said.