ICRA is floated by Industrial Finance Corporation of India (IFCI).According to the chairman and managing director of IDBI, GP Gupta, his institution is in favour of the merger of the two credit rating agency to bring about consolidation in the credit rating market.

``There is no need to compete for the market segment like this, merger is a good solution,'' he said on the sidelines of the sixth annual general meeting of IDBI here on Wednesday.

Regarding financially battered IFCI's merger with IDBI, Gupta said that it was the government which would take a decision, after an IFC-appointed committee finalises its recommendation. IDBI is undertaking a major capital restructuring exercise in order to improve its languishing share price as also to enable it to come out with an American Depository Shares (ADS) issue.

``Share price is a major area of concern for the directors of IDBI. Once the capital restructuring exercise comes through there will be considerable improvement in share valuation, Gupta told shareholders.

The IDBI share is currently hovering around Rs 33 against the initial public offer (IPO) price of Rs 130. On the ADR issue, he admitted that there could be some drag on account of its 30 per cent shareholding in Industrial Finance Corporation of India (IFCI) but expressed confidence of getting over it.

According to him, a detailed proposal for the restructuring of the capital has been submitted to the Ministry of Finance and that the institution is waiting for the decision of the ministry.

``I think the government may reduce its stake but may not know the exact percentage,'' he said.

He defended IDBI subscribing to the Rs 101 crore rights' issue of IFCI saying ``we have subscribed to the issue as we wanted to protect our 30 per cent shareholding''. On insurance, Gupta said the financial institution had not yet taken any decision on roping in a strategic partner.

The FI was planning overseas (cross-border) operations towards which it would submit a proposal to the Finance Ministry in two to three days' time. Overseas operations would entail funding Indian companies wishing to set up ventures abroad and not necessarily setting up offices there, he clarified.Meanwhile, the instituition has asked SBI Caps to prepare the draft proposal for the sellof IDBI's share in SIDBI to other financial institutions.

Though SBI caps is free to fix a price for the disinvestment programme of SIDBI, IDBI's earlier consultant has estimated it at Rs 60-Rs 70.