Privatization Of IDBI Bank: Lender To Remain Private After Strategic Sale; PSU Will Not Be Subject To Norms
November 30, 2022: Once IDBI Bank (Industrial Development Bank of India) is privatized, DIPAM noted that neither the government nor the LIC will be obliged to inject capital into the lender.
IDBI Bank is currently not subject to audit by the Comptroller and Auditor General. The voting rights of the shareholders after the sale of the bank will be governed by existing RBI guidelines.
IDBI Bank Limited, which was classified as a ‘private sector bank’ for regulatory purposes by the Reserve Bank of India from January 21, 2019, will retain the same status after its strategic sale.
Further, it will not be subject to the norms applicable to a state-run company after its privatization. An “appropriate disbursement” is under consideration for the new owner of IDBI Bank to achieve minimum public shareholding (MPS) over an extended period, the finance ministry clarified on Sunday, adding that the winning bidder will not be barred from undertaking a corporate restructuring of subsidiaries of IDBI Bank.
The remaining 15 percent share of the government in the bank after privatization will be treated as “public shareholding”.
“Furthermore, details regarding such aspects will be provided in specific documents (including Share Purchase Agreement or SPA) shared with QIPs (Qualified Institutional Placements) at the RFP stage,” the Department of Investment and Public Asset Management (DIPAM) said in a pre-expression of interest (EoI). said in response to questions.
The last date for submission of EoI is 16 December. The successful bidder will have to make an open offer for the acquisition of 5.28 percent of the public shareholding.
The current ownership of IDBI Bank is that the Government holds 45.48 percent and LIC holds 49.24 percent. Once IDBI Bank is divested, DIPAM noted, the government or LIC will not be obliged to inject capital into the lender.
IDBI Bank is currently not subject to audit by the Comptroller and Auditor General (CAG). The voting rights of the shareholders after the strategic sale of IDBI Bank will be governed by the extant Reserve Bank of India guidelines, the government added.
Meanwhile, the government invited bids for the privatization of IDBI Bank last month. It will sell a total of 61 percent stake in the financial institution along with LIC.
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