Update on Privatization of IDBI Bank

Dear Sehpaathians,

Government of India announced privatization of IDBI bank in budget 2016-17, process of which was to be initiated after March closing. Now the report coming on this issue is, The Employee and Officer Union of IDBI Bank have gone threatening on a no work policy. IDBI bank has already held strike from 28th March 2016- 31st March 2016, due to which there was a huge business loss across India as accounts couldn’t be closed. The loss was in tunes of over 30000 crores.

Government also seems to have moved her foot a few steps behind on the issue. Latest declaration of Government says, it is supporting merger of banks but no privatization is possible.

Our Look to IDBI Issue

IDBI was the Industrial Development Bank of India which was formed for Industrial Purpose loan activities and was transformed in a complete bank in 1991. Looking at the financial compulsions and need of financial markets we are of the opinion that Banks are to be merged in India, but Privatization of PSB banks in India looks a distant happening. Banking Board set up under the chairmanship of Sh. Vinod Rai has asked for Banking Consolidation, to make them competitive and no need to add capital to banks for BASEL III requirements.

In India, Banking sector is subject to huge political interference, and any single move of consolidation within banking sector can bring out adverse political conditions in the country. Banks are also the backbone of the economy so any move on banks will be taken with a lot of care. NPA and recapitalization are biggest challenges in the banking sector for now.

In our Opinion government wants to prioritize its focus on NPA recovery, public lending to banking bonds to bring in Capital for Banks and Merger of atleast 4 loss making banks.

According to us Privatization of IDBI is not easy in near future. A lot of resistance is already there from staff members and political parties across India. And even in case anything of such type happens the big share holders of IDBI will be government, SIDBI, LIC.

An advice to all the newly recruited Probationary officers at IDBI bank is to be calm, join the bank, enjoy the banking environment, but keep up your efforts for other competitive exams also. SSC, RBI, SIDBI, NABARD can be your next targets.

sehpaathi