The financial institution would also revamp its promotion and transfer policies while considering a voluntary retirement scheme (VRS) which would be different from banks, top officials said after the board meeting here last night.

"The discussions in the board (about future pay package) was positive and most of the proposals were accepted with some changes. The salaries will be related to performance," IDBI chairman GP Gupta said.

While a portion of the salary would be linked to overall profit of the FI, a portion of pay hike would be equated with the incremental profit of IDBI.

The government was likely to accept the proposals that would reduce the differences in salary of IDBI officials compared to its nearest competitor ICICI, whose current salaries are 5-10 times higher. Banking secretary Devi Dayal, who is on the IDBI board as government nominee, refused to comment saying "I cannot disclose what happened in the board meeting."

Elaborating on the salary issue that was pending for the last six years, IDBI executive director AK Doda said the board felt that there should be performance linked incentives to motivate officials and ensure that the bank was able to attract the bright people and stop outflow. "We will device a system of rating officials and ensurerit was rewarded. We expect this will motivate the officials and incorporate an element of competition in them," Mr Doda, who was heading the expert committee for reviewing IDBI's salary structure, said.

...to offload 51% stake of Sidbi at Rs 30 per share
The Industrial and Development Bank of India (IDBI) has fixed the share price of its subsidiary Small Industries Development Bank of India (Sidbi) at Rs 30 a share and is expected to make a capital gain of Rs 460 crore this fiscal.

The IDBI board approved the proposal of offloading 51 per cent stake in Sidbi, top IDBI officials said after a meeting here. "It has been decided that IDBI will hold 49 per cent stake in Sidbi with remaining 51 per cent being held by banks and financial institutions (FIs) including LIC and GIC," IDBI chairman GB Gupta said adding that the price was fixed at Rs 30 per share.

IDBI is expected to make a capital gain of Rs 460 crore by offloading about 23 crore shares to FIs and banks, likely by the end of this fiscal, official sources said.

shares were valued between Rs 48-66 per share based on various methods of valuation yield and averaged to Rs 58 per share.

As the share of Sidbi is not listed, SBI Caps said the average price of Rs. 58 per share could be discounted by 15 per cent for non-listing, arriving at the fair price of Rs 50.SBI Caps, it is understood, to have justified the valuation for the primary reason that Sidbi catered to niche sector of small scale industries which account for 35 per cent share in India's export and about 40 per cent of the manufacturing sector output.

Sidbi has a net asset base of Rs 16,561 crore with debt-equity ratio of 4.3 and book value of Rs 63.87 as on March 31, 2000 sources said adding Sidbi's strong fundamentals reflected in low gross and net non-performing assets (NPA) level of 3.82 per cent and 1.33 per cent respectively.

Ranked amongst top 25 development banks in the world, Sidbi is the nodal agency for operation of Union government schemes for SSI sector including the Technology Upgradation Fund Scheme for Textile and Credit Guarantee Scheme for SSI. Besides, Sidbi is exempt from payment of Income Tax or any other tax on income, profit or gains.

(PTI)