The Hindu Business Line : LIC not keen on taking over IFCI — IDBI may again emerge sole contender

LIC's disinclination would mean that Industrial Development Bank of India (IDBI) would once again emerge as the sole contender for taking over institution once the Government gives its green signal.

"LIC is not looking at taking over IFCI," a top LIC official told Business Line. He said that though the Government might have had internal discussions to explore the possibility of LIC taking over IFCI, the life insurance company has not had any formal discussion on the issue with the Ministry of Finance.

As reported earlier, the Ministry of Finance had considered LIC as one of the possible candidates for taking over IFCI. It was thought that IFCI, with its long experience of financing the corporate sector as a development financial institution, could act as an appraisal arm for the insurance company's exposure to the infrastructure sector.

LIC, however, feels that it has enough expertise of its own and would not require the technical support from an outside entity.

The Government has indicated that it would take a final view on the future of IFCI sometime during fiscal 2006-07. The Finance Ministry feels that sometime during the next fiscal, IDBI should be able to go through with the full integration of erstwhile IDBI Bank.

IDBI is understood to be having problems in fixing salary structure for the erstwhile employees of IDBI Bank, many of whom were earning much higher salaries than the staff of IDBI. Officials feel that the problem is of transitory nature and should be settled by the turn of the current fiscal after which they would have a clear picture of the options in hand.

Meanwhile, IFCI too has been showing healthy recoveries of its huge baggage of non-performing assets there by making it more attractive as a takeover candidate.

Other than IDBI, the Government had also earlier considered Punjab National Bank (PNB) as the candidate to take over IFCI. However, the move fizzled out with PNB seeking huge compensation of around Rs 3,000 crore for taking over the ailing institution.