Centre should not shirk its responsibility in IDBI, says Bank Union

All India Bank Employees Association (AIBEA) on Friday said that Centre should not shirk its responsibility of providing additional capital to IDBI Bank while burdening Life Insurance Corporation of India (LIC) to bail out loss making bank.

Referring to the news of LIC being allowed to increase its stake in IDBI Bank, C H Venkatachalam, General Secretary, AIBEA in a letter to the Union Finance Minister Piyush Goyal said, "Due to the huge pile of bad loans in IDBI Bank, the need has arisen to augment additional capital to IDBI Bank." 

He added, "while investment is a part of LIC’s business, it cannot be that all loss-making institutions are to be bailed out by LIC at the cost of the interest of the common people who are investors in the life insurance company."

Like the banks, even LIC has a huge portfolio of non-performing assets/investments, he said.

If LIC invests in IDBI Bank then the Government’s stake in the bank will come down below 51 per cent which is contrary to the assurance given to the Parliament when IDBI was converted into a bank, said Venkatachalam.

Reports stated that LIC has finalised the deal with IDBI Bank, which will eventually pave way for the infusion of Rs 130 billion in the NPA-mired state-run bank.

Government currently holds an 80.96 per cent stake in IDBI.