 "AIBEA asks government to cancel proposal reduce stake in IDBI Bank")
The All India Bank Employees' Association (AIBEA) has demanded the Union Minister of Finance Arun Jaitley to reconsider its plans to reduce its stake in IDBI Bank to below 50% and to cancel the proposal by retaining it as a public sector bank. The association will shortly announce agitation programmes on this issue, said C H Venkatachalam, general secretary of AIBEA.
The association alleged that the present intent of the Government of India to consider the option of reducing its stake in IDBI Bank below 50%, in the Budget proposal as part of the transformation process of IDBI Bank, effectually leading to privatisation, "is patently a breach of assurance and an affront on the sanctity of the assurance made on the floor of Parliament - the highest polity of Parliamentary democracy".
The letter said that when the IDBI (Transfer of Undertaking & Repeal), 2002 was subject matter of debate in Loksabha during December 2002 and December 2003, the then Finance Minister Jaswant Singh has assured that post conversion, the Government of India shall, at all times, maintain not less than 51% of the issued capital of the firm.
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The new Budget proposal has also created justifiable anxiety and concern among the staff members of the Bank as also the customers of the bank impacting on their confidence in the bank, said AIBEA.
It pointed out that according to the Government of India's Mid Year Economic Analysis 2015-16 Report has attributed that the increase in the Non Performance Assets in Scheduled Commercial Banks is due to less than adequate pick up in domestic growth, slowdown in the global economy and negative spillovers from global financial markets.
This says that the issue of ownership is different from the reasons for increased NPAs in the commercial Banks, it argues.
It added that considering the increase in NPA is not exclusive to IDBI Bank, the proposal tantamount to targeting and isolating the Bank. The present financial position of the bank is not systemic failure, but systematic failure of the successive managements to put in place stringent measures to contain and recover NPAs, it added.
"It would be pertinent to indicate that in the year 2004, Rs 9,000 crore of NPAs euphemistically called stressed assets were transferred to Stress Assets Stabilisation Fund (SASF) and was touted by the then authorities that IDBI as Bank would begin with a clean slate. Exactly, after a decade, very same issue of NPAs in double proportion i.e. more than Rs 18,000 crore is haunting the Bank," it said.
Considering that the entire NPA or stressed loans in the bank are loans due from corporate houses and big business as no priority sector loans are involved in this Bank, reducing the equity would mean selling the equity to the private hands which may include the very same defaulters who have not repaid the loans to the Bank, it alleged.
"Sizeable quantum of NPAs in IDBI is a sequel to its discharging the mandated DFI (development financial institution) role. In fact, the Parliamentary Standing Committee of Finance in its report has recommended revival of DFI. Since IDBI Bank is best suited to discharge the DFI role for the industrial development of the Country, it should be retained in Public Sector, nurtured and facilitated with required capital requirements," it added.
