Lok Sabha Question No. 57 (STARRED), answered on 2018-07-20
Subject: Takeover of IDBI Bank
Ministry: FINANCE
Asked by: GAURAV GOGOI, DUSHYANT CHAUTALA

## GOVERNMENT  OF INDIA MINISTRY  OF FINANCE DEPARTMENT  OF FINANCIAL  SERVICES

## LOK SABHA STARRED QUESTION NO. *57

TO BE ANSWERED  ON THE 20 TH  JULY  2018/ ASHADHA  29, 1940 (SAKA)

Takeover of IDBI Bank

## *57. SHRI GAURAV  GOGOI: SHRI DUSHYANT  CHAUTALA:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether   the  Government   has  recently   decided  to  make   the  Life  Insurance Corporation  of India (LIC) as the major shareholder  of the Industrial  Development Bank of  India  (IDBI)  and  if  so,  details   thereof   and  the  reasons  and  justification therefor;
- (b) whether   LIC  had  sought   the  Government's/IRDAI approval   to  buy a controlling  stake  in IDBI bank  under some  pressure  and if so, the details  thereof;
- (c) whether  IDBI bank  is the worst  performing  Public  Sector  Bank whose  bad loans are in several  crore  and if so, the details  thereof;
- (d) whether  the hard earned  money  of the LIC policy  holders  are likely  to sink  in loss  making   IDBI  bank   and  LIC  is  facing  stiff  resistance/opposition from  various unions/associations/federations and  policy   holders   and  if  so,  the  details   thereof along with  the corrective  steps proposed  to be taken  by  the Government  to protect the  LIC  from  entering   into   any   contract   with   IDBI  bank   and  to  safeguard   the interest  of policy  holders;  and
- (e) whether  other  formalities  like  naming  the bank  and its operation,  staff matters have  been  completed   and  if  so,  the  time   by   which   LIC   is  likely  to  take   over   the operations  of the IDBI?

## ANSWER

THE FINANCE  MINISTER (SHRI PIYUSH  GOYAL)

(a) to (e):  A Statement  is laid  on the Table  of the House.

## STATEMENT FOR LOK SABHA  STARRED QUESTION NO. *57 FOR 20 TH  JULY 2018  REGARDING  'TAKEOVER OF IDBI BANK' BY SHRI GAURAV  GOGOI  AND SHRI DUSHYANT  CHAUTALA,  MEMBERS OF PARLIAMENT.

(a)  to  (e):  Union   Finance   Minister,   in  his  Budget   speech  (2016),  had  announced, 'The process of transformation   of  IDBI  Bank has  already   started.   Government will  take  it forward  and also consider  the option  of reducing  its stake  below  50%.' Against  this background,  after approval  of LIC's  Board,  LIC submitted  a proposal informing, inter alia, of various  measures  for safeguarding  the policyholders fund,to the  Insurance   Regulatory and  Development   Authority of  India  (IRDAI)  for acquiring   controlling stake   in  IDBI  Bank Limited.   After   consideration   of  LIC's submissions   by   IRDAI  andreceipt   of  IRDAI's   permission,   LIC  has  written   to IDBI Bank Limited  expressing  interest  in acquiring  51% controlling  stake  in the bank.  In this regard,  it may  be noted  that  both  LIC and IDBI Bank Limited  are Board-driven  entities,  and take  their  decisions  as per extant  policy  and regulatory framework.   After   consideration   of  LIC's   offer  by   the  Board  of  IDBI  Bank Limited, the bank has sought Government's decision in the context of Government's   stake  coming   down   below   51%  as  a  result  of  the  proposed acquisition.  The  matter  is under Government's consideration.

A bank's  performance  is measured  on various  parameters.  Key parameters  include, inter  alia, operating  profit  to total  assets ratio,  non-performing  asset (NPA)  ratio, provision   coverage   ratio,   cost-to-income   ratio   and  low-cost   deposits   (current accounts   and  savings  accounts, i.e., CASA)  as a percentage  of total   deposits.   Of these, as of March  2018, among  public  sector banks,  IDBI Bank Limited  is above average in terms  of most key  parameters, viz., operating  profit  ratio,  cost-to-income ratio,  provision  coverage  ratio  and CASA  ratio,  and is below  average  in terms  of net NPAs,  details  in respect  of which  are at Annex.

Since the matter  is under consideration,  part  (e) of the question  does not arise at this point  of time.

## Lok Sabha Starred  Question  No. *57, for  20.7.2018 Key Parameters relating  to IDBI Bank Limited

As on 31.3.2018

|   S. No. | Parameter                           | IDBI Bank Limited   | Public Sector Banks   |
|----------|-------------------------------------|---------------------|-----------------------|
|        1 | Operatingprofitto totalassets ratio | 2.26%               | 1.43%                 |
|        2 | Cost-to-incomeratio                 | 37.5%               | 53.92%                |
|        3 | Provisioncoverageratio              | 63.4%               | 61.1%                 |
|        4 | CASAratio                           | 37.15%              | 36.33%                |
|        5 | NetNPAamount                        | Rs. 28,665 crore    | Rs. 4,54,473crore     |

Source:  Banks