Standing Committee likely to table IDBI corporatisation bill

It is expected that once the bill is passed, the financial institution will apply for a banking license. However, a section of officials pointed out that obtaining a license would be the least of problems for IDBI. The officials were sceptical about IDBI making any reasonable headway as a bank.

Presently, even established commercial banks were finding it difficult anyway to conform to international prudential norms, they pointed out. It was a moot point, therefore, how IDBI with its lack of experience and a commitment to continue development banking simultaneously proposed to operate, they wondered. They hoped the committee would take note of the fact that conversion of IDBI into a bank could end up channelling short-term deposits into long-term project lending, creating a further asset-liability mismatch in sector.

Still, they felt that some sort of consensus at least has been reached within the Standing Committee for it to finalise its findings, and the government would have to examine how the recommendations fitted in with its own policy.