Parliamentary panel repeals Act to convert IDBI into a bank

Mumbai: The Parliamentary Standing Committee on Finance has approved repeal of the IDBI Act, paving the way for conversion of the largest financial institutions into a bank.

The IDBI Bill of 2002, which was introduced in the winter session of the Indian parliament last year, was referred to the standing committee.

IDBI officials say the report of the panel headed by Janardhana Reddy that was tabled in the parliament last week, strongly recommended the government to retain its 51-per cent, grant tax exemptions for five years and offer a voluntary retirement scheme (VRS) package.

There is no specific provision in the Bill providing for the converted entity to act as a development bank. Rather, the reference of the development bank is being substituted by IDBI banking company, the officials add.

Expressing deep concern over the absence of adequate provisions in the Bill to protect employees' interest, the committee said a special VRS package should be launched for the present employees of IDBI so that no employee of any category is aggrieved due to its conversion into a bank.

When IDBI becomes a bank, its employees may be required to possess specific professional skills and may be required to be posted in new locations as the bank expands its network.