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Ban defaulters from selloffs: IDBI

Sidhartha & Gaurav Raghuvanshi in New Delhi

The Industrial Development Bank of India has sought a ban on loan defaulters from participating in the government's divestment process. The divestment ministry, however, said such defaulters would be part of the bidding process as long as they did not merit disqualification as per its guidelines.

"We will go by the guidelines and not entertain requests from individual financial institutions for keeping any bidder out," a senior divestment ministry official said.

Institutional sources told Business Standard that IDBI, in two separate letters addressed to divestment secretary Pradip Baijal and secretary of banking and insurance D C Gupta, had referred to a prominent business house that was interested in bidding for several government companies, including the Shipping Corporation of India and the State Trading Corporation.

Earlier, the Unit Trust of India had written to the divestment ministry demanding that the same group be kept out of the divestment programme because it had failed to honour its commitments to the financial institutions.

While divestment minister Arun Shourie was not available for comment, a senior official said they would go "strictly by the book" in such cases.

"If we start entertaining such requests from the financial institutions, the entire divestment process could come to a standstill. We have laid down clear guidelines and any financial institution seeking a ban on any bidder should approach Parliament and get the guidelines changed," the official said.

As per the guidelines of the divestment process, apart from the criteria of minimum net worth and relevant experience of the bidders, if a company or any of its sister concerns has been convicted by a court for a non-security related offence, it cannot participate in the divestment process.

In the case of an offence where the country's security is involved, a chargesheet is enough to bar the company.

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