New Delhi Government will soon seek expression of interest for stake sale in IDBI Bank, a top official said, marking progress in disinvestment, which will be the first of its kind privatization in the banking sector.
The bank which was put in place by the RBI under the prompt corrective action (PCA) framework, will be the first to privatize a public sector bank.
“We have been on this for quite some time. This is also the first transaction of its kind where we will privatize a bank through bidding. Now that the bank has come out of PCA, looking at it, we have a possibility. It is also the first case of bringing a private partner there. And the expression of interest, we are working on it and it will be released soon,” said Tuhin Kanta Pandey, secretary of DIPAM, FICCI on Wednesday. Said at CAPAM 2022 – 19th Annual Capital Markets Conference.
Cabinet Committee on Economic Affairs gives in-principle approval for strategic disinvestment and transfer of management control IDBI Bank in May 2021.
Through DIPAM, the government is working towards getting clarity from the Reserve Bank of India on the structure of the proposed sale and the size of the deal. Government and LIC hold 94 per cent stake in IDBI Bank, the government holds 45.48% in the bank, while Life Insurance Corporation of India holds 49.24%. The stake sale will be decided by both the entities.
The government recently held road shows in the US and at the local level, demanding the size of the deal from the RBI, guidelines or terms on mergers, consortium structure and a clear path for the government to reduce its equity holding in the bank. Used to be.
The sale of IDBI Bank, if it ends within this financial year, will contribute to whose goal? 65,000 crore from disinvestment in 2022-23. already picked up 24,544 crore, most of which is contributed by the listing of the country’s largest insurance company LIC in May this year.
The Department of Investment and Public Asset Management (DIPAM) has lined up more than half a dozen companies for strategic sale. These include BEML, Shipping Corp, CONCOR, Vizag Steel, IDBI Bank, Nagarnar Steel Plant of NMDC and HLL Lifecare.
Pandey said the merger of land assets of companies like BEML would accelerate the pace of disinvestment in the public sector enterprise.
“In some of the major transactions, this demerger has already happened or is in advanced stages and after which we will be able to invite financial bids,” he added. Apart from BEML, the de-merger of non-core assets of Shipping Corporation of India was also stalling the disinvestment process.
Pandey also asked the private sector to explore investment opportunities in CPSEs being blocked for privatization, and said that disinvestment should be viewed more from the point of view of reforms rather than financial management. He said Indian companies should consider brownfield assets for acquisition.
“So, therefore, the current context of the economy, where we want to go for capital formation, growth and see this decade as the decade of India, now we have to open up investment opportunities. One is from the brownfield,” he said.
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