Government may shuffle heads of some PSU banks


NEW DELHI: The government is considering a proposal to shuffle the heads of some public sector lenders, including IDBI BankBSE -1.11 %, to improve their performance and resolve the issue of bad loans.

“There is a proposal for swapping of MD level position in banks which is being looked into. Final decision would be taken after careful consideration,” said a source.

There are also talks of the CEO and managing director of IDBI Bank, Kishor Kharat, being moved to another bank.

The Appointments Committee of the Union Cabinet, headed by Prime Minister Narendra Modi, will take a final decision on this issue.

IDBI Bank has largest presence in joint lending and a has critical role in many Corporate Debt Restructuring (CDR) proposals, sources said.

According to a Parliamentary Committee report, although IDBI Bank has been a pioneering institution in the financial sector of the country, in 2015-16 it registered a loss of Rs 3,664 crore as against a net profit of 873 crore in 2014-15.

The bank has also seen decline profits on a sequential basis — Rs 2,031 crore in 2011-12, to Rs 1,882 crore and Rs 1,121 crore in 2012-13 and 2013-14, it said.

The decline in profits of IDBI Bank could be attributed to increase in Gross Non-Performing Assets, loan write-offs and poor financial results, Committee on Petitions said in its report.

It has recommended that the Finance Ministry should effectively liaise with the IDBI Bank for formulating a Transformational Plan with a target of putting the stressed projects back on track.

It has suggested bringing down Gross NPAs to 3 per cent and Net NPAs to zero per cent by 2018-19, selling of non-core assets to fund the growth.

The board of IDBI Bank last month approved proposal for dilution of stake in some non-core businesses to shore up capital base.