The Hindu Business Line : At IDBI Bank, they're now less averse to merger

With its top brass who had vehemently opposed a merger shaven off with successive resignations, the second rung within IDBI Bank now holding charge appears to be less allergic to the idea of forming a single entity by the fusion of the two.

"It is not a question of being for or against a merger or a reverse merger. What we should look for is the long-term sustainability of the merged entity. If the long-term value is preserved there might not be opposition from with IDBI Bank," a senior IDBI Bank official said.

Senior Government functionaries have once again sent out signals recently that a fresh attempt might be made to merge the two entities after the passage of the Bill to restructure IDBI in Parliament. The Bill is aimed at enabling IDBI to convert itself into a commercial bank with development financial institution characteristics.

The talks of fresh merger proposal has started doing its rounds ever since the talk has been going around that the present UTI Chairman, Mr M. Damodaran, is to take over as the next Chairman of IDBI, a post that he has been holding concurrently.

"We have heard of Mr Damodaran taking over at IDBI. We see it as a positive development since he is known to be a pragmatic person. Whenever there are such changes it is hoped that all the options would be revisited," IDBI Bank sources said.

Earlier, the then top brass of IDBI Bank including its Chairman, Mr M.S. Verma, and Chief Executive, Mr Gunit Chaddha, were known to have opposed any merger of the two institutions. Both have subsequently left the bank, with Mr Ajay Bhimbet, who later took over charge also resigning to join another bank.

The Reserve Bank of India too is understood to have had reservations against the merger since it felt that IDBI, with its weak financials and a heavy load of non-performing assets (NPA)s, might become a drag on IDBI Bank, which is seen as one of the better performing private banks.

However, it appears that the next proposal for a merger or a reverse merger might come only after IDBI has completed its cleaning up act. Ministry of Finance officials had recently said that the NPAs of IDBI would be gradually shifted to asset reconstruction companies for recovery and resolution.

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