Cabinet to take up divestment of 45.5% in IDBI Bank soon
The Cabinet will soon consider the proposal to sell the government’s 45.5 per cent stake in IDBI Bank, paving the way for strategic divestment in the lender.
An approval will be sought to give the Department of Investment and Public Asset Management (Dipam) the authority to move ahead with the divestment process, as banks fall under the purview of the Department of Financial Services (DFS), said a senior government official.
“Dipam cannot move forward with the divestment process until an approval from the Cabinet is received, given that banks come under work allocation of the DFS. After the Cabinet’s approval, intermediaries can be appointed,” the official said.
The government had planned to sell its balance stake in IDBI Bank to private, retail, and institutional investors through the stock exchange in the last financial year. However, the pandemic delayed the plan, which the government intends to complete this year.
“Although the process should have moved faster, we will be able to close the transaction this financial year,” said the official quoted above.
Dipam will decide on the strategy for offloading the stake only after getting the Cabinet’s nod, added the official. The government will also consult LIC, which owns 49.2 per cent in the lender, before proceeding, the official said.
As the government indirectly holds 94.7 per cent stake in IDBI Bank through LIC, the insurer will also consider selling its stake, as the new buyer would want to hold a majority in the lender, an official had earlier said.
Last month, the RBI removed IDBI Bank from its prompt corrective action framework, easing restrictions placed on the lender.