The Life Insurance Corporation (LIC) of India and the central government have decided to sell off their 60.72 per cent stake in IDBI Bank. At present, the two own close to 94 per cent in IDBI Bank, of which the Centre has 45.48 per cent stake and LIC has 49.24 per cent, as of June 30. As per the details, the Centre will divest a 30.48 per cent stake, while LIC will offload 30.24 per cent. This would be the first attempt to privatise a public sector bank in India.
As per details, the last date and time for submission of IDBI Bank expression of interests (EoIs) is December 16. All the expressions of interest (EOIs) shall be valid for 180 days and can be further extended by another 180 days.
"Expression of Interest is invited for Strategic Disinvestment of specified GoI and LIC stakes in IDBI Bank along with transfer of management control," tweeted Secretary, DIPAM. Disinvestment means the liquidation or sale of the assets owned by the government.
Last year, the Centre shared its intention to exit IDBI Bank. The bank was under the Reserve Bank of India’s (RBI) Prompt Corrective Action (PCA) framework from May 2017 to March 2021.
In March 2021, the RBI removed IDBI Bank from its enhanced regulatory supervision PCA framework after noticing an improvement in financial performance.
Following that, the Cabinet Committee on Economic Affairs agreed to its strategic disinvestment and transfer of management control. The government has amended the IDBI (Transfer of Undertaking and Repeal) Act, 2003, to grant a licence to IDBI Bank under section 22 of the Banking Regulation Act.
Also read: Dipam Secretary Tuhin Kanta Pandey on Disinvestment and its Challenges
The IDBI Bank sale will contribute to the FY23 divestment target of the Centre of Rs 65,000 crore. It has already raised Rs 24,544 crore, most of it by listing the country’s biggest insurer LIC in May.
The Centre has been targeting to divest several companies, like BEML, Shipping Corp, Concor, Vizag Steel, IDBI Bank, Nagarnar Steel Plant of NMDC, and HLL Lifecare.
The Centre has stressed privatisation of companies and asked the private sector to explore investment opportunities, stating that divestment should be looked at as a reform rather than fiscal management.
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