IDBI Bank: Government decision to privatize IDBI Bank stands: Arun Jaitley

NEW DELHI: Finance Minister Arun Jaitley said today that the government’s decision to privatize IDBI bank stands and will be implemented at the right time.

“One of the objectives of supporting non-PCA (rapid corrective action) banks was to have the banks where strong lending must take place so that they are able to support growth, lending and the economy. – even “, he declared in unveiling the reforms of the banking sector.

For PCA banks, he said, the primary goal seems to be for them to maintain their regulatory capital and that has been the benchmark followed for the IDBI.

“The original decision (on the privatization of the IDBI bank) stands. It has not been reconsidered but there is still time to implement a decision,” he said.

Jaitley had said in 2016 that India was not ready for the privatization of PSU banks and that their current features would continue, with the exception of IDBI Bank.

“We are trying to consolidate some of the banks, which might otherwise have difficulty in a competitive environment … In one case, we are considering reducing the government’s stake to 49%, IDBI Bank,” he said.

When asked why privatization in the financial space was not taking place, he replied: “To achieve a particular level of reform, you have to move to this stage of public opinion … from the social sector in India, the public sector banks in the sector, despite the competition, had a much larger contribution.

Describing the roadmap for the merger of state-owned banks, Financial Services Secretary Rajiv Kumar said, “It is a matter of trust in every bank. The confidence that the government is committed to maintaining. It will take its natural course.

Each bank will come up with a differentiated banking strategy by which it will have to decide its structure and future course of action, Kumar said.

“It is an exercise to reform and also reorient the whole process, responsibility and accountability,” he said.

Kumar added that the reforms will decide what kind of differentiated banking strategy lenders undertake with the given amount of capital and the core skills they have, and then find the solution.

On the issue of increasing capital provided to weak banks, Kumar said that IDBI Bank’s total needs are much higher.

“They are already realizing a lot of non-core assets. You will see activity there, non-core assets have great potential in retail,” he said.

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