The Cabinet secretariat, in a letter to the finance ministry, has said that UTI chief M Damodaran has been appointed interim chairman and managing director of the Industrial Development Bank of India without the approval of the appointments committee of the Cabinet.

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The appointments committee comprises the prime minister, the minister for personnel and minister of the department concerned.

The letter, addressed to secretary (banking and insurance) N S Sisodia, was sent soon after Damodaran, who also heads UTI-I and UTI-II, was given additional charge of IDBI and appointed to the institution's board as a director, official sources told Business Standard.

The finance ministry has since then moved a proposal to give Damodaran a five-year term at IDBI's helm. The terms of appointment are yet to be made public.

Finance ministry officials said the objection is unlikely to come in the way of his appointment as IDBI's full-time chief.

The officials were of the opinion that Damodaran, being an Indian Administrative Service officer and in-charge of UTI, did not require the Appointments Committee's nod.

They said the ministry was of the opinion that appointments could be made and an ex-post facto approval taken from the Appointments Committee.

The officials also said the government had adopted a transparent process in the appointment of the IDBI chairman.

It had constituted a high-powered selection committee headed by Reserve Bank of India deputy governor Rakesh Mohan, chief economic adviser A K Lahiri, former Bank of India chief MG Bhide and Vinod Rai, additional secretary in the finance ministry, to shortlist candidates for the post.

The other candidates in the fray included Jaimini Bhagwati, an Indian foreign service officer, and IDBI executive director A K Doda.