Industrial Investment Bank of India (IIBI) is likely to be merged with the Kolkata-based Allahabad Bank. |
The central government had earlier indicated that IIBI should be acquired by a bank, preferably from the public sector. It has also agreed to infuse Rs 143 crore into IIBI to clean up its balance sheet. |
Sources close to the development said there were concrete indications from the government that the development financial institution will be merged with the Kolkata-based bank. |
The former chairman of IIBI and United Bank of India, Madhukar (he retired as IIBI chairman on February 29), has said that IIBI was a strong candidate for an M&A deal. |
It should be merged with one of the three Kolkata-based banks as the entities had a strong presence in eastern region. |
"IIBI should be taken over by an organisation wanting to develop and grow in this part of the country," he said. |
But O N Singh, the current chairman and managing director of Allahabad Bank, denies any such development. Following Madhukar's retirement, Singh, the present chairman of Allahabad Bank, has taken over as IIBI chairman. |
Madhukar said IIBI was set up as Industrial Reconstruction Bank of India, a vehicle to take over assets of sick companies. |
It had run into problems, but with financial re-engineering and better deployment of funds, was now in better shape. |
"We have recorded a surplus of Rs 2 crore in the third quarter "" overheads were around Rs 6 crore, while income was Rs 8 crore," he said. |
IIBI had floated a voluntary retirement scheme. It had attracted around 50 applications and 20 more were expected before the scheme closed. IIBI had around 265 employees at last count. |
Talking about non-performing assets, Madhukar said till date IIBI had recovered Rs 53 crore of bad assets against Rs 35 crore achieved in the last fiscal. |
The employees of IIBI had demanded merger of IIBI with Industrial Development Bank of India (IDBI) and had also made a representation to the central government demanding this. |
IIBI was the last of the series of DFIs that remained to be either merged with another bank or be itself turned into an banking entity. |