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July 26, 2001
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Money > Business Headlines > Report July 26, 2001 |
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Cut in govt share in IDBI suggestedBS Economy Bureau A parliamentary committee has recommended a substantial reduction in government holding in Industrial Development Bank of India to 33 per cent. Without specifically naming privatisation, the committee on public undertakings has in its report on IDBI said "the status of IDBI as a statutory corporation requires a relook". It adds, since the government has made its intention clear to reduce its shareholding in the public sector banks, "the committee has felt the policy (should be extended) to provide a level playing field to IDBI". The sweeping recommendations of the committee tabled in Parliament on Wednesday says the company should at least get the same kind of flexibility in its operations as ICICI so that it can take on the competition from the fast-changing financial system. On the reduction in government share holding in the company, Copu says such a reduction will improve the public perception about the company and will allow it to raise funds on more favourable terms. Interestingly, it says that the next IDBI chief should be picked from within IDBI. As a justification, the committee says, "there are no other comparable equivalent organisation in India which can offer the requisite experience and expertise relevant for the functions of IDBI". Making a strong plea to equate the opportunities for the company on the lines of ICICI, the committee has said there should be major amendments to the IDBI Act. These include allowing IDBI to grant financial assistance to industrial concerns for setting up projects abroad, besides permission to invest in portfolio management schemes offered by internationally reputed banks to invest its idle temporary foreign exchange reserves. The other recommendations made by the committee include giving the company the status of infrastructure company, restoration of its tax-free status and compulsorily investing a percentage of the small savings funds with the organisation to tackle the problem of reduced spread between average returns and cost of funds for IDBI. Powered by YOU MAY ALSO WANT TO READ:
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