IDBI Bank stock surges 7% on RBI 'Fit & Proper' nod

18 Jul 2024 , 12:20 PM

IDBI Bank shares jumped 7% to ₹94 in Thursday’s BSE session after the Reserve Bank of India (RBI) allegedly gave ‘fit and proper’ approval to bidders for the bank ahead of the Union Budget 2024.

IDBI Bank has been up for privatisation for several years, and the government has been waiting for an RBI assessment on bidders fulfilling the “fit and proper” requirements — or being compliant with regulations and not under the scrutiny of other regulators — before proceeding to the next step of the process.

The central bank has reported on all bidders except one, who is a foreign participant who did not provide information, and the overseas regulator has also not provided data, according to ToI on Thursday. With the current market capitalization approaching ₹95,000 crore, the Centre may possibly earn roughly ₹29,000 crore from the disinvestment. However, numerous observers have commented that the transaction terms are not particularly appealing.

The government and the Life Insurance Corporation (LIC) own 94.72% of IDBI Bank, with LIC owning 49.24% and the government owning 45.48%. Public shareholders make up the remaining 5.28%.

The Centre intends to sell a 60.7% interest in the bank, which includes 30.5% of its own shares and 30.2% held by LIC.

Market experts see IDBI Bank as a more straightforward divestiture prospect because it operates as a private lender, with government stakes increasing due to significant capital infusion to control bad debt-related losses.

At 12:11 p.m., the share was trading 5.3% higher at ₹92.6 on BSE. The stock is up 37% year to date and 155% over the last two years.

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