IFCI right in rejecting bid: Chidambaram

Union Finance Minister P Chidambaram today said the Industrial Finance Corporation of India (IFCI) Board of Directors has taken an appropriate decision in rejecting the bid submitted by a consortium of Sterlite-Morgan Stanley.

The IFCI had planned to raise funds to manage its non-performing assets. A consortium of Sterlite Industries and Morgan Stanley offered to buy 26 per cent stake and sought management control. However, as negotiations failed, IFCI turned down the bid.

"There was a single bid and it was a conditional bid. The IFCI board rejected the conditional bid. In my view, it is a correct decision," Chidambaram told reporters here.

He pointed out that there would be more bids in the rebidding process. "I am sure when the rebid process starts, there will be more bidders who will conform to the RFP documents," he said.

However, Chidambaram refused to comment on commencement of the rebid process. "The decision relating to the rebid process rests with the IFCI board," he added.

The finance minister was in Bangalore to mark the opening of the 1,000th branch of Vijaya Bank and to launch the new brand identity of Canara Bank.

In his address, he said the financial sector, especially the public sector banks should aid the economic growth of the country. "Last year, the country's GDP growth rate was 9.4 per cent. The country has the capacity to cross the 10 per cent mark. The financial sector can help the nation in crossing this mark," he said.

Chidambaram further said, "every player in financial sector should grow at a rate proportionate to the GDP growth. Banks, Mutual Funds, Provident Funds and insurance sector should grow equally and share the burden of financing the growth."

According to him, the nationalised banks had a larger role in ensuring higher economic growth. "Only, the nationalised banks have the necessary reach for inclusive growth. If the nation has to develop, the bottom of the pyramid like Dalits, minorities and SC / ST should have access to financial products," he contended.

He also emphasised the need for the public sector banks to consolidate their operations since it was inevitable. "Consolidation has to happen in the banking sector. There is no choice, until external forces impose their choices upon you. I know there is opposition in the banking sector against consolidation...How long can you resist consolidation?" he said.