IDBI Bank Privatization: Govt All Set To Sell Min 26% Stake To Private Firms (New Details)


The uncertainty is due to the fact that the RBI, as the regulator, and LIC, as the major shareholder are involved as well.

The govt has started floating Request for Proposals (RFP) as the process of privatising IDBI Bank gains speed.

With the RFP, the centre will bring transaction and legal advisors onboard to help with the sale process.

Percentage Of Sale Undetermined

However, there is a difference between the RFP issued now and divestment RFPs before. 

In the case of the latter, the amount of stake the govt will offload was clearly laid out.

This is because in that situation, non-financial state-owned companies were up for sale.

But in the case of IDBI Bank, there is no word yet on how much of its stake in the bank the govt will sell. 

The uncertainty is due to the fact that the RBI, as the regulator, and LIC, as the major shareholder are involved as well.

Sale Could Range From Minimum 26% To Entire Stake

In order to determine the amount of stake to be sold,  it will consult with the RBI and LIC, which is IDBI Bank’s promoter, and the newly appointed transaction advisor.

LIC holds a stake of 49.24% and the govt, presently the co-promoter, holds 45.48% stake.

The quantity of stake offloaded could range between 26% to 45.48% or the govt’s entire stake.

26% is the minimum percentage required in order to transfer management control.

The Department of Investment and Public Asset Management or DIPAM has said in the RFPs that interested parties including investment banks, financial institutions, consulting firms and law firms must submit their bids by July 13.

IDBI Bank Picked For Sale Long Time Ago

Back in 2019, LIC became IDBI Bank’s majority shareholder after it acquired controlling stake. 

After this development, the RBI reclassified the bank as a private sector entity.

The plan of strategic divestment of IDBI Bank was already approved by the Cabinet Committee on Economic Affairs back in May.

It was decided that LIC will reduce its stake along with the govt, with the intention to give up its management control.

Other Entities Up For Privatisation

For the present fiscal, the Union Budget had announced its divestment target of Rs 1.75 lakh crore. 

The amount would be acquired after privatising Air India, Bharat Petroleum, Shipping Corp, Concor, two state-owned banks (Central Bank and Indian Overseas Bank) and LIC’s IPO..

The govt had already set its eyes on IDBI Bank to be privatised, despite LIC becoming the majority shareholder. 

It was already decided that the bank would eventually be sold to a private sector entity.

Central Bank, Indian Overseas Bank Will Be Sold To Private Firms; Staff Will Be Reduced Via VRS

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