RBI sets stage for government, LIC stake sale in IDBI Bank – Times of India
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NEW DELHI: Setting the stage for commencing the sale of government and LIC shares in IDBI Bank, RBI is willing to relax the cap on maximum shareholding, provided they submit a plan for phased reduction of equity.
The banking regulator has also decided to accept the request from the department of investment and public asset management (DIPAM) for undertaking a “fit and proper” check for those, who submit an expression of interest, before inviting bids from only those who make the cut.
“It is only fair that this is done since it does not make sense to undertake the exercise after declaring the successful bidder,” explained an official. A green light from RBI will pave the way for DIPAM to start the process over the next few weeks. This is the latest bid to sell the shares held by government and LIC in the bank, which has seen several ups and downs and multiple bailouts by the government.
The Centre now believes that the bank has been restructured and offers a good proposition to potential investors. It expects a strong interest from investors, following roadshows held recently. In fact, some of the exemptions that have been sought follow the feedback during these interactions.
LIC is the largest shareholder with 49.2%, while the Centre holds a 45.5% stake, according to data on the Bombay Stock Exchange.
RBI’s guidelines provide for initial lock-in of a minimum 40% of the paid-up voting equity share capital of the bank during the first five years. In the long-run, the promoters can hold up to 26% stake. Sources said RBI is relying upon its earlier guidelines on disinvestment of stake to make an exception in case of IDBI Bank, although corporate entities will not be allowed to participate in the process.
The banking regulator has also decided to accept the request from the department of investment and public asset management (DIPAM) for undertaking a “fit and proper” check for those, who submit an expression of interest, before inviting bids from only those who make the cut.
“It is only fair that this is done since it does not make sense to undertake the exercise after declaring the successful bidder,” explained an official. A green light from RBI will pave the way for DIPAM to start the process over the next few weeks. This is the latest bid to sell the shares held by government and LIC in the bank, which has seen several ups and downs and multiple bailouts by the government.
The Centre now believes that the bank has been restructured and offers a good proposition to potential investors. It expects a strong interest from investors, following roadshows held recently. In fact, some of the exemptions that have been sought follow the feedback during these interactions.
LIC is the largest shareholder with 49.2%, while the Centre holds a 45.5% stake, according to data on the Bombay Stock Exchange.
RBI’s guidelines provide for initial lock-in of a minimum 40% of the paid-up voting equity share capital of the bank during the first five years. In the long-run, the promoters can hold up to 26% stake. Sources said RBI is relying upon its earlier guidelines on disinvestment of stake to make an exception in case of IDBI Bank, although corporate entities will not be allowed to participate in the process.
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