NEW DELHI: The government has left IDBI Bank headless, despite the state-owned lender being in a precarious financial condition even as
LIC is in the process of acquiring a majority stake.
B Sriram , who had resigned from State Bank of India three months ago to take charge at IDBI, retired on Sunday and no replacement has been named so far, raising speculation about his successor.
In fact, the government had not appointed a new
IDBI Bank chief when it finalised the long-awaited appointments for other state-run banks, some of which were without a full-time chief for as long as eight months.
The government had earlier indicated that Sriram would be given an extended run at IDBI Bank by the new owner but sources in the bank suggested that a case filed by the employees’ union had held up the government’s plan.
As a result, the bank — with NPAs of over 30 per cent and losses that added up to Rs 2,400 crore — will have to make do with a part-time head, at least for the time being.
As part of LIC’s acquisition plan, the state-run insurer will first increase its stake in IDBI Bank to 15 per cent and subsequently to 51 per cent. The government has clarified that the entire subscription of equity will help the bank raise its capital base to fund expansion and meet the growing funding needs of the corporate sector.
IDBI Bank has been a problem child for the government as repeated attempts to turn it around have failed. LIC’s majority stake acquisition is the latest attempt to keep the financial institution-turned-bank afloat.
The move has come in for severe criticism from various quarters, but the gover nment has ter med it as a win-win deal.
