Govt to repeal IDBI Act; reform package for IFCI in the offing

By Our Banking Bureau | 23 Oct 2002

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New Delhi: The central government says Industrial Development Bank of India (IDBI) will be first corporatised by repealing the IDBI Act in the winter session of the parliament as part of its restructuring, while a reform package for the ailing Industrial Finance Corporation of India (IFCI) will be worked out by March 2003.

“The first step will be corporatisation of IDBI through the repeal of the IDBI Act. The idea is, once the IDBI Act is repealed and it becomes a corporate entity, then we can look at the future,” says Shekhar Agarwal, joint secretary in the ministry of finance, after a meeting of lenders and stakeholders here.

Agarwal says the plans to merge IDBI with a public sector bank or converting the financial institution (FI) into a universal bank will be taken up only after the corporatisation. “We are trying to repeal the IDBI Act by the winter session. There is no proposal to bring in an ordinance as of now.” Agarwal rules out a bailout plan for IDBI saying the financial health of the FI is not bad enough to warrant it.

In the first ever meeting of stakeholders and lenders, top officials of finance ministry, the Reserve Bank of India, Life Insurance Corporation, State Bank of India, Punjab National Bank, Bank of Baroda and General Insurance Corporation also discussed the restructuring plan of IFCI.

Expressing the government’s concern over IFCI, Agarwal says: “We wanted to talk to lenders and stakeholders and get their perception. We will take everybody’s views and work for a proposal for IFCI. May be everybody has to contribute something.”

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