PUNE: The banking wing of RSS affiliated Bhartiya Majdoor Sangh (BMS) has declared its support to the offer made by the Life Insurance Corporation of India (LIC) to take over a majority stake in the Industrial Development Bank of India (IDBI) Bank, while Left affiliated unions have expressed strong opposition to the move. IDBI is facing a crisis due to the huge number of Non-Performing Assets (NPAs).
IDBI Bank apparently has NPAs of 28 per cent, which is an unprecedented level of unrecovered assets. The bank has been desperate for the last couple of years and has resorted to listing its shares and raise capital from the market but to no avail. The government-run financial institution has been approached by the LIC, which already has 10.8 per cent stake in the bank, to increase it to 51 per cent, making it the majority stakeholder.
“IDBI Bank has been in deep trouble recently and that has reflected in the morale of the employees. More and more people are being appointed on contract basis and there have been no increments for the last 5 years,” said Dinesh Kulkarni, chief of the financial wing of the BMS, adding, “The only other option would have been to privatise the bank.”
“Which is why we welcome the decision. It is an important bank and is a very crucial lender in the financial sector. We are not saying that the recovery process of the loans must be stopped, but we are saying that while those processes are going on, the survival of the bank should be ensured,” Kulkarni said, adding, “All unions are coming together for the issue of NPAs, but we welcome the decision.”
“The move will be fatal for LIC. The LIC is being treated like a milch cow by the government. There have been repeated attempts to privatise the bank too and even foreign buyers were approached, but no one came forward,” said Vishwas Utagi of the All India Bank Employees Association, adding, “This reflects the failure of the government is ensuring the recovery of the loans.”
“The LIC is a giant but it has been made so by millions of investors who have entrusted their life savings to the institution. If the government keeps using that money to take out banks out of trouble instead of making sure the NPAs are recovered, then, it would harm common investors,” Utagi said and added, ”This will also negatively affect the employees and agents of the LIC as their benefits will be cut to rescue big corporates.”