The government today sounded evasive about media reports suggesting that it was planning to ask the Life Insurance Corporation of India to take a controlling stake in the crippled IDBI Bank Ltd., saying the boards of the respective entities will take a call on the matter.
The government has left all the decisions to boards of LIC and IDBI Bank and will not micromanage them, a senior finance ministry official told reporters on the sidelines of the two-day annual summit of the Asian Infrastructure Investment Bank.
The fact that both entities are state-owned does not mean there cannot be business relations between them, the official said.
Reports suggest that having failed to a get a buyer for its stake in IDBI Bank Ltd., the government might ask LIC to acquire at least 40 percent stake in it, something it had done with Axis Bank in the past. LIC already owns 10 percent in IDBI bank Ltd.
On the LIC-IDBI move, the government had sought the views of insurance regulator IRDAI and markets watchdog SEBI. The The Insurance Regulatory and Development Authority of India does not allow LIC or any other insurer to own more than 15 percent in any company.
The official added that the Sunil Mehta committee, which was set up to draft guidelines for a bad bank, had “come up with a fantastic report” within a short time.
On June 8, interim Finance Minister Piyush Goyal had 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 the Allahabad High Court judgement on the matter must be respected but added that the banking secretary will sit down to find a solution.