Privatization Of IDBI Bank Starts Soon, Govt Will Sell Its 47.11% Stake To Private Firms; IDBI Bank Earned Rs 326 Cr In Q2-2020
The Government of India is planning on selling the stakes in the Industrial Development Bank of India (IDBI) which was established in 1964.
With the plans in the initial phase, the exact manner of the transaction is likely to be finalized later.
Read on to know more…
IDBI Stake Sale To Begin By The End of FY2020-2021!
In the Union Budget 2020-21, Finance Minister Nirmala Sitharaman had announced that the government intends to sell its balance holding in IDBI Bank to private, retail, and institutional investors through the stock exchange.
Sources with knowledge in the matter said that in the next few weeks, the Ministry of Finance is likely to seek Cabinet approval for selling its stake in IDBI Bank.
Currently, the Govt has a 47.11% stake in IDBI Bank. The sale might take place in two to three tranches.
However, this being the first step, the transaction could take place towards the end of FY2020-2021 or at the start of the next fiscal year.
A person familiar with the development said, “As of now, work has begun on the initial proposal.”
Under the Centre’s disinvestment program, this transaction would help raise funds. The target of the divestment program for FY2020-21 is Rs 2.1 lakh crore from stake sale proceedings.
The bank had noted a whopping net profit of Rs 324 crore for the quarter that ended on September 30 as opposed to the net loss of Rs 3,459 crore.
Along with a huge profit, IDBI’s asset quality has also improved with gross non-performing assets at 25.08% of gross advances as of September 30, 2020, versus 29.43% the previous year.
LIC’s Role In Divestment of IDBI!
The state-owned Life Insurance Corporation (LIC) of India also owns a 51% stake in the bank.
LIC has also been noted of the sale proposal although it’s not clear whether the insurance body will divest its stake in the bank as of now.
The insurer might divest when the valuations look attractive.