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MPs write to PM opposing IDBI conversion
New Delhi, Aug 10: A day before the union cabinet takes up the issue of IDBI`s restructuring, opposition MPs have written to Prime Minister Atal Bihari Vajpayee strongly opposing conversion of the country`s leading development financial institution into a bank, saying it will have `devastating` effect on industrial growth of the country.
New Delhi, Aug 10: A day before the union cabinet takes up the issue of IDBI's restructuring, opposition MPs have written to Prime Minister Atal Bihari Vajpayee strongly opposing conversion of the country's leading development financial institution into a bank, saying it will have "devastating" effect on industrial growth of the country.
About 50 members of parliament asked the PM to ensure government's holding in IDBI remains at least 51 per cent, restore income tax benefits and retain the DFI role and permit it to raise cheaper funds.
"IDBI's corporatisation will have a devastating effect in the industrialisation of the country and seriously impact employment generation," they said in a letter to the PM.
The letter comes a day before the cabinet meeting to approve IDBI's corporatisation and conversion into a bank through repeal of IDBI Act of 1964.
"The country is passing through industrial recession and such a move will have a further negative impact and send wrong signals," it said.
The MPs fear that the corporate entity will be guided by profit motive and the government would have no influence over management to carry out the development mandate given to it.
"We feel that government should let IDBI continue its DFI role in its present form," the MPs said.
In order to ensure investors' interest and avoid a run on the bank, they said government equity holding should not go below 51 per cent at any time.
"This will also enable IDBI to raise more funds and at cheaper rates due to the faith of investors in government institutions," they said.
"IDBI's corporatisation will have a devastating effect in the industrialisation of the country and seriously impact employment generation," they said in a letter to the PM.
The letter comes a day before the cabinet meeting to approve IDBI's corporatisation and conversion into a bank through repeal of IDBI Act of 1964.
"The country is passing through industrial recession and such a move will have a further negative impact and send wrong signals," it said.
The MPs fear that the corporate entity will be guided by profit motive and the government would have no influence over management to carry out the development mandate given to it.
"We feel that government should let IDBI continue its DFI role in its present form," the MPs said.
In order to ensure investors' interest and avoid a run on the bank, they said government equity holding should not go below 51 per cent at any time.
"This will also enable IDBI to raise more funds and at cheaper rates due to the faith of investors in government institutions," they said.
Bureau Report