IDBI chief wants govt to map out blueprint to get out of mess

NEW DELHI: IDBI chairman PP Vora on Wednesday pushed his case for restructuring of the institution by way of corporatisation and an enabling provision for a merger with a nationalised bank.
In a meeting with banking secretary D C Gupta, Mr Vora has asked the government to draw a blueprint for IDBI recast to rescue it from the bad cash flow situation.
Mr Vora has asked the government to corporatise the institution as announced in the Budget ‘02-03. While a two-fold path was formulated to turn the institution into a bank, not much has been done even as seven months have passed. If the merger with a nationalised bank is a concern for the government, the institution is willing to start the banking operation from scratch, Mr Vora explained.
For this, the finance ministry would have to move two bills, first for the corporatisation of IDBI and next for bringing the new company under the Banking Regulation Act. But, during the past two quarters, the institution has managed to earn only Rs 30 crore compared to Rs 2,500 crore when the institution was in a healthy position. Its advances, so far, have also declined to Rs 1,000 crore.
Besides, the institution is also reeling under RBI’s stringent provisioning norms. The institution has made accelerated provisioning of Rs 2,000 crore to bring down the non-performing assets (NPAs) and clean up its books. In its responsibility to restructure the financial institution’s loan to the Dabhol Power Company, the institution has also been following up for the formalities to pay out the costly foreign currency denominated lenders by mobilising the money internally. The loan that the IDBI-led consortium plans to pay back is Overseas Private Investment Corporation’s $850 m loan.
All the institutions have asked the government to extend the benefit of tax saver bond to facilitate easy mobilisation of resources.