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IDBI rethink on insurance head

Ashok Jainani

MUMBAI, Dec. 24

INDUSTRIAL Development Bank of India's (IDBI) plans to enter into the life insurance business have received a jolt with the management having second thoughts on the appointment of chief executive for the new business initiative.

Senior IDBI officials said that terms and conditions of appointment have become a hitch. Mr Y.P. Gupta, former Managing Director, Life Insurance Corporation of India (LIC), who was appointed on December 1 as advisor, was likely to assume responsibilities of a chief executive of the insurance joint venture to be formed.

The thorny issue seems to be the terms of appointment and the salary/perks for Mr Gupta, though it is much less than the industry norms. He has been offered a monthly salary of Rs 75,000 plus perks while the competing institutions are paying much more.

Rethink on the chief executive's post has also led to a delay on IDBI's part to enter into the insurance business when other competing institutions had already started issuing policies. ICICI-Prudential and HDFC Standard Life have already launched new in novative life insurance products early this month.

This is being cited by officials as ``just another example of IDBI management dragging its feet over non-issues when the competition is fast catching up and has surpassed the institution in more than one way.''

The revision in the compensation package and the much-talked about voluntary retirement scheme (VRS), which was expected to be tabled before the board meeting last week, could not get the board's approval. After its approval, the package would have to ge t the Finance Ministry's nod for implementation.

``The officers' community is agitated over the management dragging its feet over the issue,'' senior officials said. The exercise includes sharing a small part of the incremental profits linked to employees' performance and the introduction of VRS is int ended to help IDBI enhance its profitability. The revised package will boost employee productivity and is aimed to attracting fresh talent.

The package envisages revamp of the performance-appraisal system and provides for fast-track promotions for officers in the `high-fliers' category.