Government may ask for expressions of investment for IDBI Bank sale by April this year, CNBC-TV18 reported on February 21 citing sources. The IDBI Bank stake sale has been vetted by the Reserve Bank of India and is believed to happen over nine months, the report asserted.
According to the report, the government and Life Insurance Corporation of India are likely to sell their entire stake in the lender. The 26 percent promoter cap for private sector banks is not a restriction for stake sale, it stated.
“Promoter holding capital in private banks is not a constrain for IDBI Bank sale. We are sure of a good response to IDBI Bank expressions of interest,” government sources told CNBC-TV18.
Presently, the government and LIC hold a 45.48 percent and a 49.24 percent stake, respectively in the lender. LIC is the advertiser of the Bank with management control.
IDBI Bank became an associate of LIC with effect from January 21, 2019, after the insurer obtained additional 827,590,885 equity shares in lender. Following this, LIC ended up acquiring 51 percent of the excellent shares in the bank.
Nevertheless, in December 2020, the LIC was reclassified as an associate company after IDBI Bank issued additional equity shares via qualified institutional placement, which curtailed the insurer’s stake to 49.24 percent.
LIC, which is marching towards public in March, in its draft prospectus announced that any additional capital infusion by the life insurance giant in its associate firm could have an adverse effect on insurer’s financial health.
At 10:45 am, shares of IDBI Bank were trading at Rs 46.80 apiece on the BSE, down 1.16 percent, while the benchmark Sensex was down 215.94 points or 0.37 percent at 57,617.03.