IFCI, PNB boards may discuss merger today

The issue of a merger of IFCI Ltd with Punjab National Bank (PNB) may come up for discussion during the respective board meetings of the two entities on Friday.

While the boards are primarily meeting to consider the results for the quarter-ended December 2003, executives did not rule the possibility of discussions on a proposed merger.

Till evening, however, no agenda relating to merger had been circulated to either IFCI or PNB directors, sources said.

Friday's IFCI board meeting is expected to be V P Singh's last as chairman and managing director with the finance ministry deciding against granting him another extension.

The board is expected to either constitute a committee of directors to oversee the day-to-day operations of the FI or appoint MV Muthu, IFCI executive director as the part-time chairman with the responsibility of overseeing the merger, sources said.

They added that the government had more or less made up its mind on merging the two Delhi-headquartered institutions though a formal announcement was yet to come.

Issues such as transfer of IFCI's sticky assets to an asset reconstruction company, treatment of IFCI staff post merger and swap ratio are yet to be worked out.

Also, apprehensions have been raised about the future of development financing since IDBI is already being converted into a bank.

Also a large number of IFCI executives are not in favour of going to PNB, given the bank's track record at handling new employees, and have instead desired to opt for a voluntary retirement scheme.

IFCI employees have also approached the government seeking a merger of the financial institution with Industrial Development Bank of India, which is to be converted into a bank shortly.

Justifying their demand in a memorandum to Finance Minister Jaswant Singh, the Coordination committee of IFCI Officers' and Employees Associations have said that the two institutions share a common mandate of fostering industrial development.

"If merged together the objective of overall industrial development could be better achieved," it said.

Besides, they pointed out IDBI held 31.71 per cent stake in IFCI and it would be simpler to adjust the staff of the two entities.

Today's memorandum is the latest in a series of requests to the government advising it against a merger with a nationalised bank. The employees had earlier sought a second voluntary retirement scheme once the merger details are finalised by the government.