Bank unions said the Cabinet approval for strategic disinvestment of the Government’s stake in IDBI Bank and transfer of management control to a strategic buyer is a retrograde step.
“The decision to disinvest in a depressing scenario would lead to underselling and passing the benefits to the private investors. It may also lead to whitewashing the bad loans from the balance sheet,” said S Nagarajan, General Secretary, All India Bank Officers’ Association (AIBOA), in a letter to the President of India, Prime Minister, RBI Governor, and Chiefs of IDBI Bank and LIC.
Staff rationalisation fears
Nagarajan feared that the profit greed of investors will lead to closure of branches/offices, restrict banking activities, lead to staff rationalisation and adverse staff service conditions, which will be counter-productive to the entire workforce.
“When the nation is reeling under health emergency, such an announcement emerging from the corridors of power is really shocking and disturbing,” he said. Nagarajan emphasised that IDBI Bank recently turned the corner after lots of effort put-in by the workforce coupled with the management’s approach to hive-off certain ancillary activities.
“The structural change brought-in by the Government through conversion of IDBI (a development financial institution/DFI) into IDBI Bank (a universal bank) in 2004 was certainly a mistaken step. …the Government’s decision to sell its stake in IDBI Bank is certainly a retrograde step… Side by side, the Government promoting an Infra Bank with huge capital is certainly intriguing,” Nagarajan said.
Appeal to the President
The Association appealed to the President, who is the Custodian of public sector undertakings and public wealth, to counsel the authorities to halt the move to disinvest the Government’s and LIC’s stake in the bank.
In addition, AIBOA sought an immediate intervention to initiate steps to recover the bad loans (at ₹36,212 crore as at March-end 2021) in a fast-track manner lest corporate defaulters acquire this great time-tested institution.
CH Venkatachalam, General Secretary, All India Bank Employees’ Association, said: “IDBI played a leading role in financing industrial development in our country. Because some private corporate houses have cheated the Bank by not repaying the loans, IDBI Bank came into problem.”
IDBI Bank’s shares on Thursday ended 6.72 per cent higher at ₹40.50 apiece. During the day, the bank’s shares rose almost 15 per cent to ₹43.50.