Govt ready to talk to strategic investors for IDBI sale: Sinha

Government is ready to discuss strategic stake sale in IDBI Bank with "any interested party", Minister of State for Finance Jayant Sinha said today.
"We are serious with our plan to turn around IDBI Bank on the lines of Axis Bank. At present the bank is working on a QIP issue and we are ready to discuss with any interested party for a strategic sale in the bank," Shina told reporters here on the sidelines of social banking awards instituted by Assocham.
When asked about the tight liquidity conditions in the market as the government is sitting on a record cash balance of around Rs 1.3 trillion (Rs 1.3 lakh crore), he said the Reserve Bank has been managing the liquidity well and there will be no cut back on government spending in the quarter.

On RBI Governor Rahuram Rajan's remark on need for a relook at the new GDP computation methodology, Sinha said it is handled by a globally reputed independent body, the Central Statistical Organisation and they are doing a good job.
Rajan has raised doubts about the veracity of the current GDP numbers under the new computation method saying there is a need to avoid overlaps and capture the net gains to the economy.
The minister reiterated the government's resolve to reform the banking sector and expressed hope that the bankruptcy code, being reviewed by a select joint committee of Lok Sabha and Rajya Sabha, will be passed at the earliest, and the code will go a long way in getting economy back on track.

Listing the benefits of a resilient bankruptcy code, Sinha said it will massively improve the creditors' right. The RBI-driven joint lenders forum, the CDR and the SDR mechanisms are all towards getting this lenders' right more enforceable.

Secondly, Sinha said, the bankruptcy code will ensure
that the cost of capital comes down significantly as banks will not be forced to set aside more growth capital for provisions.
Besides, he added, the proposed code will help deepen the shallow corporate bond market, which for ages the government and the regulators have been working to develop.
A developed and deepened corporate bond market will help a company with better rating to price the debt instrument lower as such instruments get higher liquidity, he said.

(REOPENS BCM 31)
Addressing the Indo-American chamber later in the evening, Sinha said the listing of stock exchanges that has been in the making for many years will help fund-starved public sector banks to meet their growth capital requirement to some extent.
Many public sector banks have stakes in stock exchanges.
"As far as listing of exchanges is concerned we want to ensure that we follow global standards on the listing... In terms of transparency and accountability. For many of our public sector financial institutions, including LIC which has stake in NSE, it is an opportunity to monetise an asset which is valuable.

"As far as public sector banks are concerned they need to strengthen their balance sheets as well as monetise their assets. So listing the exchanges is an opportunity to enable our national institutions to monetise holdings. I think this is in our national interest too," Sinha said.
On the role of MUDRA scheme, he said the institute has already given out Rs 70,000 crore worth of loans to MSMEs benefiting about 7-8 million people. Though the MUDRA website say lion's share of this is farm and other priority sector lending of banks.
On alternate investment assets, the minister said tax treatment of alternate assets require significant revamp and that was the reason why tax pass through of alternate assets has been given.

The tax pass through is to ensure that tax treatment of alternate assets is at par with other regular financial products so that we can create our own domestic venture capitalists and private equity funds. At present about 90 per cent of the PE and VC money flow in from outside, he said.
But Sinha was quick to add that on tax pass through for category 3 alternate assets, we must be prudent.