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NEW DELHI : The government will soon seek expression of interest for stake sale in IDBI Bank, a top official said, marking progress in the disinvestment which will be the first of its kind privatisation in the banking sector.
The bank which was put Prompt Corrective Action (PCA) framework by the RBI would be the first case of public sector bank being privatized.
“We have been at it for quite some time. It is also a first of its kind transaction where through a bidding route we will be privatising a bank. Now that the bank has come out of the PCA, it is looking up, we have a potential that this could be also the first case of actuallu bringing in a private partner there. And the expression of interest, we are working at it and it will be issued soon,” said DIPAM secretary Tuhin Kanta Pandey on Wednesday at the ‘FICCI CAPAM 2022 – 19th Annual Capital Markets Conference.
The Cabinet Committee on Economic Affairs gave in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May 2021.
The government through DIPAM has been working towards getting clarity from the Reserve Bank of India on the structure and deal size of the proposed sale. The government and LIC together hold 94 per cent in IDBI Bank, The government holds a 45.48% stake in the bank, while Life Insurance Corp. of India owns 49.24%. Stake sales by both entities will be decided.
The government recently conducted roadshows in the US and locally, nad has been seeking clarity from the RBI on the deal size, guidelines or conditions on mergers, consortium composition and the glide path for the government to reduce its equity holding in the bank.
IDBI Bank’s sale, if it concludes within this financial year, will contribute to the target of ₹65,000 crore from divestment in 2022-23. It has already raised ₹24,544 crore, majority of which is contributed by listing of the country’s biggest insurer LIC in May this year.
The Department of Investment and Public Asset Management (DIPAM) has lined up over half a dozen companies for strategic sale. These include BEML, Shipping Corp, CONCOR, Vizag Steel, IDBI Bank, Nagarnar Steel Plant of NMDC and HLL Lifecare.
Pandey added that de-merger of land assets of companies like BEML, will quicken the pace of disinvestment in the public sector enterprise.
“Some of the key ongoing transactions have this demerger already done or in advanced stages and following which we would be able to invite financial bids,” he said. Besides BEML, de-merger of non core assets of Shipping Corporation of India was also holding up the disinvestment process.
Pandey also asked the private sector to explore investment opportunities in CPSEs being put on the block for privatisation, and asserted that disinvestment should be looked at more from the angle of reforms, rather than fiscal management. He noted that Indian companies should look at brownfield assets for acquisitions.
“So, therefore, the present context of economy, where we want to go for capital formation, growth and look at this decade as India’s decade, we now need to unshackle the investment opportunities. And one of the investment opportunities is from the brownfield,” he said.
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John Miller has been writing about science, gaming, and tech culture for over a decade. He’s a top-rated reviewer with extensive experience helping people find the best deals on tech and more.
