India's Life-Saving Plan for IDBI Makes No Sense
LIC’s customers signed up to protect themselves, not a dying lender.
This would be money down the drain.
Photograph: Sanjit Das/Bloomberg
Rescuing a dying bank with taxpayers’ money is often the only way to prevent a costlier contagion. But nursing a deposit-taking institution by tapping life-insurance premiums of policyholders? That’s like allowing a localized infection to spread all over, hoping the natural immunity of an otherwise healthy body will help beat back the germs.
India’s plan to sell a majority stake in IDBI Bank Ltd. to Life Insurance Corp. of India is not modern medicine. It’s bureaucratic quackery. New Delhi hasn't found a genuine private-sector buyer for the ailing IDBI for more than two years. Hence, the stage is being cleared for state-owned LIC, the government’s preferred buyer of stuff nobody wants.