State Bank of India’s Managing Director B Sriram has resigned after his appointment as head of IDBI Bank, sources told PTI.
The development assumes significance amid reports that insurance behemoth Life Insurance Corporation is planning to acquire a majority stake in the debt ridden IDBI Bank.
The government last week appointed Sriram as MD and CEO of IDBI Bank for a temporary period of three months.
He has put in his papers and his resignation from the board of SBI has been forwarded to the Appointments Committee of the Cabinet headed by Prime Minister Narendra Modi for acceptance, sources said, adding the competent authority will take a final call on the matter.
Sriram took charge of IDBI Bank on June 22 following MK Jain demitting office to take over as Deputy Governor of RBI.
The ACC approved the appointment of Sriram as MD and CEO of IDBI Bank for three months with effect from MK Jain’s demitting office, said an order issued last week by the Department of Personnel and Training.
LIC is looking to enter the banking space by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the bank’s stressed balance sheet.
A possible scenario LIC could be looking at is to make IDBI Bank a subsidiary on the lines of its housing finance and mutual fund businesses.
If the deal goes through, IDBI Bank would shed the character of public sector bank and become a private sector lender like Axis Bank. As per the Companies Act 2013, the upper age limit for MD and CEO in the private sector is 70 years.
Earlier this year, Finance Minister Arun Jaitley had said the government's decision on privatisation of IDBI Bank stands and it will be implemented at the right time.
In his Budget speech for 2016-17, Jaitley had said the process of transformation of IDBI Bank has already started. “Government will take it forward and also consider the option of reducing its stake to below 50 percent,” he had said.
Sriram is the longest-serving public sector bank MD and has wide experience, including in stressed assets management.
IDBI Bank is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs 55,600 crore at the end of March quarter. Bank’s net loss stood at Rs 5,663 crore.
Sriram worked as the MD-corporate and global banking in SBI since July 2014. He had been MD of State Bank of Bikaner and Jaipur.