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US-64 aftershocks on IDBI

Sarbajeet K. Sen

NEW DELHI, July 10

THE crisis over the US-64 scheme that has jolted the Unit Trust of India (UTI) is sending tremors down the rank and file of another institution, the Industrial Development Bank of India (IDBI).

With the Finance Minister, Mr Yashwant Sinha, ruling out any budgetary support to extricate UTI out of its present crisis, fears are being expressed within IDBI that the Government would once again force the financial institution into providing sizable f unds to bail out the trust.

``We are apprehensive that we would be asked to step in again to help the Trust. We had contributed around Rs 300-350 crore when the earlier package was worked out for UTI two years ago. This time, the bail-out might be larger,'' Mr M. Ghosh, President, All-India IDBI Officers' Association (AIIDBIOA) told Business Line during a visit to the Capital.

He said that his apprehension was based on the similarities of the UTI case and that of IFCI Ltd. ``IDBI is being asked to come to the rescue of IFCI since it is principal shareholder with around 37 per cent holding. If the same argument is used in the U TI case then the burden of bailing out UTI would also fall on us,'' Mr Ghosh said. Out of UTI's original corpus of Rs 5 crore, 50 per cent was subscribed by IDBI.

Mr Ghosh said that IDBI feels that the Government should permit it to divest its holding in IFCI, while IDBI's share in UTI's corpus should be taken up either by the Centre or the Reserve Bank of India. ``Maybe the disinvestment process would not yield u s much but at least we would not be asked now and again to pump in funds in such troubled times,'' Mr Ghosh said.

He pointed out that with declining profitability and erosion in the quality of assets, the institution was not in a position of participating in any such bail-out exercise any more. ``We are dead against participating in any bail-out package. At this rat e, one day we would also have to run around seeking recapitalisation,'' Mr Ghosh said.

The AIIDBIOA President felt that IDBI was currently extremely vulnerable to official pressures in view of the fact that it has been headless for nearly five months. ``There is constant interference by the Government in the routine affairs of the institut ion. Without a full-fledged Chairman, it would be difficult for the institution to withstand the pressures from official circles,'' he said.

Mr Ghosh said that the Government's apathy towards IDBI was evident from its approach towards the selection of a chief. ``Why should it take 10 months to appoint a head of such an important institution?'' he asked. Incidentally, the Finance Minister had on Monday assured that the new IDBI Chairman would be announced in a couple of weeks' time.