Centre Plans To Sell 51% Stake In IDBI Bank, Talks Underway With LIC: Report

According to the report, the officials in the Central government and state-owned LIC are discussing the quantum of shares to sell in the IDBI Bank.

New Delhi: The Central government is planning to sell nearly 51 per cent of state-owned IDBI Bank, claimed a Bloomberg report on Thursday. According to the report, the officials in the Central government and state-owned LIC are discussing the quantum of shares to sell in the IDBI Bank.

The report further claimed that LIC and the Centre will take buyer interest by the end of September. Moreover, a group of ministers will make the final decision on the structure of the share deal. In the meantime, the shares of IDBI Bank jumped 6.3 per cent in the past 12 months, raising its market valuation to about Rs 42,470 crore ($5.3 billion).

And not just that, the report also claimed that the officials are also planning to sell some stakes of the government and LIC in IDBI Bank and cut management control.

In the process, the RBI will allow investors to buy a stake larger than 40 per cent, as entities seek permission from the central bank to purchase stakes above that threshold, while non-regulated firms are capped at purchases of 10-15 per cent.

The Life Insurance Corporation was quoted as saying by PTI on August 12 that it has not received any timeline from the government for the stake sale in its subsidiary IDBI Bank.

It must be noted that LIC owns 49.2 per cent of the lender and the government and public own the remaining shareholdings in the bank which was on the verge of collapse before it was forced into the control of LIC weighed by a third of its loans turning dud.

The LIC during its IPO filings in March this year had said that it will retain part of its 51 per cent stake in IDBI Bank to reap the benefits of the bancassurance channel. It also had added that the plan is to completely privatise the bank as the government wants to exit it.

The IDBI Bank was on December 19, 2020 reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a qualified institutional placement. That time, the LIC had bought a 51 per cent in IDBI Bank in 2019 for Rs 21,624 crore at an average price of Rs 61 per share.