Exclusive: Finance ministry likely to invite financial bids for IDBI Bank by December

IDBI Bank has shown continued improvement in profitability.

The financial bids of Industrial Development Bank of India (IDBI) are likely to be invited by December as the clearance from the RBI is awaited for the strategic sale from which the government aims to get approximately Rs 16,000 crore in this financial year, a senior government official said.

“From the IDBI strategic sale, the government will get a good amount of Rs 15,000-16,000 crore. The strategic sale should move this year. Government is targeting financial bids by December and close the deal in the fourth quarter,” the official told Moneycontrol.

The government and LIC combined are selling 60.72 per cent stake in IDBI Bank.

The Department of Investment and Public Asset Management (DIPAM) is awaiting clearance from the Reserve Bank of India (RBI) since it concerns strategic sale of a bank.

“It has been sent to RBI, discussions with them have been held, clearance is expected soon. The strategic sale of IDBI Bank is a low hanging fruit because technically it's already privatised,” he said.

IDBI Bank Limited has been categorised as a 'private sector bank' for regulatory purposes by RBI with effect from January 21, 2019.

After RBI clearance, due diligence by the bidders will be done for which a minimum of 42 days is given, he said. “There is keen interest of investors in IDBI Bank,” the official added.

DIPAM in January had said that it has received multiple Expressions of Interest (EOI) for the strategic disinvestment of the stake held by it and Life Insurance Corporation of India (LIC) in IDBI Bank.

The government's decision to permit foreign funds and investment entities registered outside of India to control more than 51 percent of IDBI Bank has further made the terms and conditions of the transaction more attractive.
IDBI Bank has shown continued improvement in profitability, asset quality parameters, and capitalization levels post coming out of the Prompt Corrective Action (PCA) restrictions of the Reserve Bank of India (RBI) in March 2021. The bank was nursed back to health with the help of a significant amount of equity infusion by the LIC, the Government of India, and started posting profits from FY21 onwards.

A email for comments to Finance Ministry in this regard remains unanswered.