In a bid to resolve the issue of bad loans, the government is mulling a proposal to shuffle the heads of some public sector lenders, including IDBI Bank. There is a proposal for exchanging of MD level position in banks which is being looked into. The Appointments Committee of the Union Cabinet, chaired by Prime Minister Narendra Modi, will take a final decision on this issue after careful consideration.
As per the Parliamentary Committee report, while IDBI Bank has been a pioneering institution in the financial sector of the country, it registered a net loss of Rs 3,664 crore in 2015-16 as compared to a net profit of Rs 873 crore in 2014-15. It also pointed out that 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 noted that the decline in profits of IDBI Bank could be attributed to rise in Gross Non-Performing Assets, loan write-offs as well as poor financial results.
The report further suggested that the Finance Ministry should effectively coordinate with the IDBI Bank for formulating a Transformational Plan with a target of putting the stressed projects back on track. It also recommended that 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.