Directives issued to government departments to continue their transaction with IDBI

Life Insurance Corporation of India (LIC) had recently acquired a majority stake in the Industrial Development Bank of India (IDBI) due to which the RBI had to change the stance of the bank from a PSU to a Private owned bank, which was just a regulatory compliance used to depict the change in the ownership of the bank and towards the market controllers in SEBI and other authorities. This change in the ownership in the banks original stance hasn’t had much effect because, in the disinvestment drive that the government is doing a mega job in, the bank is still partly and wholly owned by the government and its subsidiaries who along the lines of business have acquired some of the assets of the government in a bid to increase the cash flow in the economy and give the government a free rein with that cash flow to infuse in diverse sectors for multi-level growths and reignite the growth story of the country with higher financial stimulus.

While the stake sale has nothing to do with the material reality of the bank, some of the government departments along the time have stopped using it as the bank of transaction, and that is hurting the business opportunities and the preposition of the bank that was given to LIC in the stake sale agreement, and because of such actions of some department in the government a directive has been issued by the Finance Ministry for all the government departments to use IDBI as their bank of choice and park their money with the bank and relayed the information that no material changes have metastasized in the bank, and it is still under the control of the government of this country which gives the department an incentive to use the bank, and its portfolio for transactions as well as use it to park their money which will be used for business disbursals in the long term loans making the credit infusion a reality to starting the stabilizing credit cycle in the system.