The coerced takeover of the publicly owned IDBI Bank by LIC, the country’s largest insurer, will neither protect the interests of the beleaguered bank nor further the interests of the insurer or its policyholders.
MARRIAGES may be made in heaven, but the hastily arranged one between IDBI Bank Ltd and the Life Insurance Corporation of India (LIC), the country’s biggest insurance company, has all the trappings of a hustled wedding commandeered by a khap panchayat in the badlands of northern India.
The Union government’s recent decision to allow the publicly owned LIC to take a 51 per cent stake in IDBI Bank without giving the insurer the privilege of enjoying the managerial control that majority ownership normally confers signals a travesty of the rules of conduct that capitalism swears by. In effect, one is asked to believe that LIC is only “investing” in the bank without taking the long-range view that ownership, especially of a bank, demands. In the process, the government appears to have started rolling out the first case of the privatisation of a public sector bank (PSB). That the means the government has adopted threaten not only the public presence in banking but also the interests of the giant in Indian insurance and its millions of policyholders is just incidental to the cynical game that is privatisation.
Once upon a time, since 1964 to be precise, what we now know as IDBI Bank was born as the Industrial Development Bank of India, a subsidiary of the Reserve Bank of In-
IDBI TOWERS, the bank’s head office, in Mumbai. A file picture.