Several major banks have successfully combined their banking operations with insurance businesses through subsidiary arrangements. Instead of exploring such possibilities, the Government has chosen to facilitate the transfer of control of a public sector bank to private ownership, said AIIEA
Hyderabad: After the United Forum of Bank Unions (UFBU) and the IDBI Bank Officers and Employees, the All India Insurance Employees’ Association (AIIEA) has opposed the decision taken yesterday by the Cabinet Committee on Economic Affairs (CCEA) to sell 60.72% of the combined equity stake held by the Government of India and the LIC in IDBI Bank to Canada-based Fairfax Financial Holdings for Rs 52,878 crore.
The decision is particularly unfortunate given that IDBI Bank has been registering consistent profitability and demonstrated significant improvement across key financial and operational parameters. The proposed privatisation also raises serious questions about the Government’s commitment to its earlier assurance to Parliament, said .Shreekant Mishra,general secretary,UFBU.
In 2003, the then Finance Minister of India had assured Parliament that the “Government shall at all times maintain not less than 51% equity holding in IDBI as a banking Company”. The proposed sale represents a clear departure from the spirit of that assurance.
AIIEA firmly believes that there was no compelling reason for LIC to reduce its stake in IDBI Bank through such a sale. LIC could have continued as a major shareholder, strengthening the existing partnership between the two institutions and leveraging the potential of bancassurance.
Several major banks have successfully combined their banking operations with insurance businesses through subsidiary arrangements. Instead of exploring such possibilities, the Government has chosen to facilitate the transfer of control of a public sector bank to private ownership. This decision is part of the Government’s wider agenda of privatising public sector enterprises and financial institutions, with potentially serious consequences for the interests of ordinary customers, employees and the economy, said AIIEA.
The AIIEA has extended solidarity to the struggle of the IDBI Bank Officers and Employees and called upon the Government to drop the proposal of privatising IDBI Bank in the interest of the customers, the economy and the people at large.
UFBU has called on its members to wear black badges on Friday to protest the government’s decision to sell a majority stake in IDBI Bank to Canada’s Fairfax Financial Holdings.
The bank unions said IDBI Bank had public deposits of around ₹3.5 lakh crore and earned net profits of ₹5,600 crore, ₹7,500 crore and ₹9,500 crore in the last three years.