FM expects better bids for IFCI

Finance minister P Chidambaram has backed state-run lender IFCI’s decision to reject a bid from a consortium of Sterlite Industries and Morgan Stanley, saying he expected more offers to come in when the re-bidding process starts. “We got a single bid, a conditional bid and therefore IFCI rejected the single, conditional bid. In my view, that’s the correct decision. The government will find the capital if necessary,” he said on the sidelines of a bank function here on Saturday. The IFCI, which had plans to raise money to manage its growing non-performing assets, had rejected the Sterlite Industries-Morgan Stanley consortium’s bid to pick up 26% stake in it, saying it was conditional. On December 20, it again invited bids and asked interested parties to submit applications by January 10. The finance minister also asked opponents of reforms who want high growth to come to terms with “changes” which alone can deliver over 9% growth. “I am sometimes surprised that people who desire 9% plus (GDP) growth have no desire to make any changes in the structure of banking, pension and insurance sectors,” he said at a function organised by Canara Bank .The UPA government, which has just about 15 months in power, is keen to push ahead with financial sector reforms, including hike in FDI limit from 26% to 49% in insurance sector, statutory powers for the interim pension regulator and more voting rights of foreign players in private banks.

Chidambaram also called on the banks to go for consolidation to keep pace with the changes and move forward. “I know there is opposition in the banking sector against consolidation… (but) The only way to grow is inorganically, by consolidating and picking up other banks. This has to happen in the banking circles and there is no other choice,” he said.