In Makeover mode

Mumbai, Sept. 26: The final structure of the Industrial Development Bank of India (IDBI) in its avatar as a universal bank is yet to emerge, . S. Sisodia, banking and insurance secretary in the ministry of finance, has said. IDBI as a bank could either focus on retail banking in the “classical sense” or restrict itself to the corporate sector. The precise contours are being worked out, he said.

Sisodia added that an expert’s advice may be required to chalk out the future course of action, but refused to comment on whether such an advice is being sought now.

When asked if a reverse option with IDBI Bank is an alternative, he said, “Anything is an option.”

News of a merger of Calcutta-based IIBI and IFCI Ltd with IDBI are also doing the rounds. However, Sisodia refused to be drawn into such speculations. “It is premature to talk about the entities involved,” he said.

The conversion of IDBI into a universal bank is part of the government’s plan to revitalise the development financial institution. The change would help the company access cheaper funds.

Replying to a query on the lenders liability law, Sisodia said that such a law could lead to several litigations. The government is keen on a lenders liability code rather than a legislation.

In May, the Reserve Bank (RBI) had come out with a set of guidelines on fair practices code for lenders which sought to bring out greater transparency in dealings with their borrowers.

The code said lenders should ensure there is proper assessment of credit applications by borrowers and that they should not use margin and security stipulation as a substitute for due diligence on credit worthiness of the borrower.

Earlier, speaking on the governance of Indian banking system at the Conference on “Indian Banking: Global Benchmarks '03”, Sisodia said that the Narsimham Committee II recommendations are being implemented.

In this regard, he added that consolidation in the banking system apart, financial institutions (FIs) are also converting themselves to universal banks. `` Some FIs have moved, some are moving'', he pointed out, without divulging details.

While the government had also initiated a move to bring down its equity in nationalised banks to 33 per cent while retaining their public sector banks, Sisodia did echo some concerns.