IDBI Bank union wants govt assurance on PSB-type job benefits

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Hours after Finance Minister Nirmala Sitharaman announced plans to sell the government's remaining stake in IDBI Bank, its officers' association said any move to change the services conditions of the employees of the LIC-controlled lender will be opposed.

Despite being a private sector bank, since LIC took the majority stake in January last year, IDBI Bank employees still enjoy service benefits on par with the rest of public sector banks (PSBs).

Presenting the Union Budget for 2020-21, the minister said the government will be exiting IDBI Bank by selling its stake to retail and institutional investors through a market offering.

The government currently holds 47.11 per cent stake in IDBI Bank, while LIC owns 51 per cent.

The news sent the IDBI Bank stock gaining as much as 17.55 per cent to Rs 39.85 in intra-day trade. It closed the day 10.03 per cent higher at Rs 37.30 on the BSE.

"As long as our service contract conditions are not changed we do not have any issues with the government move. We will seek a written assurance on this," IDBI Bank Officers Association General Secretary Vithal Koteswara Rao told PTI.

IDBI Bank was set up as a Development Financial Institution in 1964. Later, it was transformed into a Bank in 2004.

Though the Reserve Bank re-categorised it as a private sector bank, the Department of Financial Services still lists it as a state-owned bank.

"We want these service contracts to remain unchanged," Rao said.

The union said it will also request the government to allow them to switch to other nationalised banks.

In January 2019, LIC was asked to acquire 51 per cent controlling stake in IDBI bank.

In the September quarter of 2019-20, IDBI Bank, which is under prompt corrective action (PCA) since May 2017, had received Rs 4,743 crore from LIC, and Rs 4,557 crore from the government.

The bank had reported a net loss of Rs 3,459 crore in the said quarter, marginally better than Rs 3,602 crore in the year-ago period.

Last month, the bank met the Reserve Bank to seek lifting of the lending restrictions.