Sriram resigns as SBI MD amid IDBI stake sale buzz
State Bank of India (SBI) managing director B Sriram has resigned from the country’s largest lender after his appointment as chief executive of IDBI Bank, sources said.
The development assumes significance amid reports that insurance behemoth LIC is mulling acquiring a majority stake in the debt ridden state-owned bank. The government last week appointed Sriram as managing director and CEO of IDBI Bank for a temporary period of three months.
He has put in his papers and his resignation from the board of SBI has been forward to Appointments Committee of the Cabinet (ACC) headed by Prime Minister Narendra Modi for acceptance, sources said, adding the competent authority will take a final call on the matter.
Sriram took charge of IDBI Bank on June 22 following M K Jain demitting office to take over as Deputy Governor of RBI. The ACC approved the appointment of Sriram as MD and CEO of IDBI Bank for three months with effect from M K Jain’s demitting office, said an order issued last week by the Department of Personnel and Training.
LIC is looking to enter the banking space by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender’s stressed balance sheet. A possible scenario would be the insurance major making IDBI Bank a subsidiary on the lines of its housing finance and mutual fund businesses. If the deal goes through, IDBI Bank would shed the character of public sector bank and become a private sector lender like Axis Bank. As per the Companies Act 2013, the upper age limit for MD and CEO in the private sector is 70 years.
Earlier this year, Finance Minister Arun Jaitley had said the government’s decision on privatisation of IDBI Bank stands and it will be implemented at the right time.
In another development, loss-making IDBI Bank is looking to increase the share of the retail loan book to 29 per cent this fiscal year from 25 per cent last year, an official said.
The structured retail loan book of the bank, which may be taken over by LIC, consists of housing loans, loan against property, education loans, personal loans and car loans.