Rs 2,500 crore package for IDBI

Finance Minister Jaswant Singh has committed to pump in Rs 2,500 crore into Industrial Development Bank of India (IDBI) over the next five years.

He also said the government would not dilute its share in the bank below 51 per cent after its conversion into a universal bank.

The Industrial Development Bank of India (repeal) Bill, which had already been approved by the Lok Sabha, was cleared by the Rajya Sabha after incorporating vital recommendations made by the standing committee on finance. These included a five-year holiday from maintaining the statutory liquidity ratio.

Singh said IDBI would have to apply to the Reserve Bank of India for the governing regulations on the cash reserve ratio front. He also assured the House that IDBI would continue to play its development finance role.

In 2003-04, the government will invest Rs 770 crore, as part of its measures to restructure the liabilities of the bank.

Singh said a special clause had been inserted in the legislation to protect the existing terms and conditions of service of both officers and other IDBI employees.

A special board meeting has been called on December 19 to discuss the steps for its conversion into a bank.

The government's stake in the financial institution could come down after a merger with another public sector bank. There have been talks of the IDBI being merged with one of the following banks: Bank of Baroda, Punjab National Bank, Indian Bank and Canara Bank.

Last week, NS Sisodia, secretary, financial sector in the finance ministry, had said the government was looking at options of merging the IDBI with a public sector bank as part of its restructuring progress.

Another major economic measure, the Sick Industrial Companies (special provision) Bill repealing the act of 1985 was differed by the House till the business advisory committee allotted time for its consideration.

More bankable

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• The finance minister has said the government's holding in IDBI will not be diluted below 51 per cent, if not cleared by the parliamentary standing committee
• The parliamentary standing committee has recommended that the newly-converted bank should be given a five-year holiday from maintaining the statutory liquidity ratio
• The finance minister has assured that IDBI will continue to play its role of development finance