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The United Forum of IDBI Bank Officers and Employees ‘has noted with caution’ the Centre’s latest stated position on diluting its stake in the bank.
On its part, the Centre has made it clear that public sector banks, including IDBI Bank, have been allowed to raise capital by diluting the Centre’s holding by up to 52 per cent.
Raising capital The Centre’s stand was stated by Jayant Sinha, Minister of State for Finance, in reply to an unstarred question by KN Balagopal, CPI(M) member, in the Rajya Sabha recently.
The Minister said that the public sector banks may raise capital from public markets through follow-on public offer or qualified institutional placement by diluting the government’s holding up to 52 per cent.
This may be done in a phased manner based on their capital requirement, their stock performance, liquidity and market conditions, the Minister told Balagopal.
The United Forum of Officers and Employees has been carrying on a series of protests against what it fears are concerted attempts to privatise IDBI Bank.
Instead of trying to contain the growth of non-performing assets (NPAs) in the bank, the Centre was planning to hand it over on a platter to the same corporates, which were responsible for their surge, it alleged.
Axis Bank model The Finance Ministry had proposed the divestment of its stake and was pushing the bank to follow the Axis Bank model, the United Forum said.
The move is a breach of the assurance given on the floor of Parliament by the then government, while repealing the IDBI Act to convert it into a universal bank, it had held.
Reports from New Delhi quoting Finance Ministry officials said that IDBI Bank would be first up for a strategic sale.
The proposal is in final stages, but the Centre is waiting for the right market valuations.
The Centre holds 76.50 per cent in IDBI Bank and, according to officials, it may not fully exit the bank even after a strategic sale of its equity.
A public financial institution, IDBI was converted into a bank under the Industrial Development bank (Transfer of Undertaking and Repeal) Act, 2003.
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