The government on Monday sounded evasive about the media reports that it was planning to ask Life Insurance Corporation of India to take a controlling stake in the debt-ridden IDBI Bank Ltd, saying the boards of the respective entities will take a call on the matter.
“Both IDBI Bank and LIC are independent organizations. We have left all the decisions to bank boards and we are not going to micromanage them,” a senior finance ministry official said on the sidelines of the two-day annual summit of the Asian Infrastructure Investment Bank (AIIB) in Mumbai.
Media reports have indicated that after having failed to get a buyer for its stake in IDBI Bank, the government might ask LIC, which already owns 8% in the bank, to purchase 43% of the firm. The government had made a similar move with Axis Bank in the past.
The media reports also said the government has sought the views of insurance regulator IRDAI and markets watchdog Sebi on the move. IRDAI does not allow LIC or any other insurer to own more than 15% in any company.
On the Sunil Mehta committee, set up to draft guidelines for a bad bank, the official said within a short period, the panel has “come up with a fantastic report”. Interim finance minister Piyush Goyal had on June 8 announced setting up of a committee under the chairmanship of Punjab National Bank’s non-executive chairman Sunil Mehta to make a draft on setting up an asset reconstruction or an asset management company for faster resolution of bad loans.
On the special dispensation that power companies have been demanding to tide over the bad debt problem, the official said there is an Allahabad High Court judgement and “we have to respect that” but added quickly that the banking secretary will sit down to find a solution.
Source: Mint