Government, LIC may sell 60% of their stake in IDBI Bank

7 Sept 2022 , 10:29 AM

According to a September 6 report from CNBC-TV18, the central government and Life Insurance Corporation (LIC) of India are set to sell a 60% stake in IDBI Bank. By October they will be inviting Expressions of Interest (EoI) for the divestiture process.

According to prior reports, the government and LIC may sell up to 65% of their equity in IDBI Bank. As of June 30, the two owned over 94% of IDBI Bank, of which the Center owned 45.48%.

At each stage of the divestiture process, the government would ask the Reserve Bank of India (RBI) for due diligence. Subject to the submission of a plan to reduce shares in 15 years, promoter holdings are not limited. The ceiling on voting rights of 26% does not change for the divestiture, though.

In 2021, the Indian government declared it will stop operating IDBI Bank. The liquidation or sale of the government's property is referred to as the disinvestment plan.

Governments employ disinvestment as a strategy to lighten their budgetary burdens and raise money for essential public services. Additionally, it is possible to privatize the assets. The sale of IDBI Bank's interest has had numerous ups and downs, and the process has been considerably delayed. The government originally intended to request EoI in May, but owing to its efforts to contact possible purchasers as well as bids, the procedure was delayed.

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