Uneasiness at IDBI Towers as helmsman exits

An air of uneasiness prevailed in the 23-storeyed IDBI Towers at Cuffe Parade in south Mumbai as news of the abrupt exit of M Damodaran from Industrial Development Bank of India (IDBI) came in.

IDBI's merger with IDBI Bank is looming and it still has to sort out some regulatory issues following its conversion into a banking company. Then, there are the huge HRD issues to tackle.

The share prices of both IDBI and IDBI Bank fell following government's decision to shift Damodaran to head Securities and Exchange Board of India (SEBI). IDBI shares fell 5.05 per cent to Rs 101.60 per share, while IDBI Bank shares fell 3.87 per cent to Rs 70.85.

Damodaran is probably the only chairman of IDBI to leave mid-way to take up another assignment. All previous chairmen had either attained superannuation or had completed their terms, except for one case in early 1980s when an incumbent had to quit before the end of his term in controversial circumstances.

Senior IDBI officials felt the bank still needed a person of Damodaran's stature. IDBI needs to push some issues with the government including its demand for extending priority sector lending status to infrastructure funding.

Damodaran had employed his clout to have IDBI's balance sheet cleaned with a transfer of Rs 9,000 crore of bad loans to a stressed assets stabilisation fund.

IDBI officials credit him with converting the development finance institution into a banking company and putting it back on the growth track during his 14-month stint.

"It's a great loss to IDBI since he (Damodaran) has done a lot of good things for the organisation in terms of bringing about the merger, and bringing about a dynamic change in the (work) culture," a senior official said on the condition of anonymity.

Damodaran had grown so ambitious that he once declared IDBI will give State Bank of India (SBI), India's largest commercial bank, "a run for its money".

The extraordinary general meeting of IDBI shareholders will now be conducted on February 23 without Damodaran. One of the members of the board is likely to chair the meeting called to seek approval for the merger plan.

IDBI Bank EGM is scheduled for February 25. The merger ratio has been fixed at one share of IDBI for every 1.52 shares of IDBI Bank.

IDBI Bank employees too are worried as Damodaran had assured them of continuing with the commercial bank as a strategic business unit (SBU) after the merger and carrying on with the development finance activity as another SBU.

They hope the new IDBI chairman will not alter the post-merger plans already drawn up.

For the secretarial, clerical and class IV employees at IDBI, it hardly matters who comes in next. "It really does not concern us. As employees, we are just anxious to know who will be our next chairman. The person has to be good to the employees," a staff member said.

The staff members are agitating since the announcement of the merger for according them pay parity with the Reserve Bank of India (RBI) employees in the merged entity.

Amid the restiveness, the top brass at IDBI went about carrying on with their schedule. Executive director O V Bundellu was busy the whole day with the annual process of interviewing employees for promotions.

A meeting of the corporate debt restructuring group kept another ED R Jayaraman Iyer engaged for the day.

A top executive said, "He is good at delegating and decision-making, without interfering in the working of executives. He's been there to absorb shocks and has not passed on any burden to his subordinates."

"He had nothing to lose in any sense. Being an IAS officer he could have always gone back to the government. This was unlike previous chairmen who were more concerned about their term, and always feared being sacked. Damodaran did not care," he said.