The government will soon be inviting financial bids for IDBI Bank stake sale, with an Inter-Ministerial Group (IMG) comprising of secretaries of the Department of Investment and Public Asset Management (DIPAM) and the Department of Financial Services (DFS) expected to meet on October 31 to finalise and approve the bidding process, Moneycontrol has learnt from government officials.
The meeting is expected to clear the final draft of the Share Purchase Agreement (SPA) – a key transaction document detailing buyer obligations, transfer of management control and post-sale responsibilities – and set the timeline for inviting financial bids from shortlisted investors.
A person aware of the development said the discussion will be critical for moving the transaction to its final phase. “Most of the groundwork has been completed. The meeting at the end of this month is expected to clear the remaining procedures so that financial bids can be invited without delay,” said the person, requesting anonymity.
Long-awaited Privatisation
The approval of the SPA and the subsequent invitation of financial bids will mark the final phase of the long-awaited IDBI Bank privatisation process that has been underway since 2021. The Centre and the Life Insurance Corporation (LIC) together hold about 94.71 percent stake in the lender and plan to sell 60.72 percent to a strategic investor, relinquishing management control.
“The transaction documents are now in advanced stages of finalisation. Once the IMG gives its nod, DIPAM will move quickly to invite financial bids,” one government source said. Quick approvals from the Core Group of Secretaries on Disinvestment (CGD) and the ministerial panel led by the Finance Minister will also be sought, he added.
Bids for IDBI Stake
Financial bids are expected to be invited between October and December this year, following which the evaluation process will begin. Once a winning bidder is finalised and approved by the Cabinet, the deal will move toward closure, marking India’s first bank privatisation in over two decades.
The Centre is in the past expressed its keenness to conclude the transaction within this fiscal year. “This sale is not just about one bank – it’s about demonstrating that India’s privatisation framework can work even in the financial sector, where regulatory sensitivities are high,” the person added.
Litmus Test
The IDBI Bank sale is being viewed by some banking experts as a test case for India’s broader bank privatisation strategy, as it involves coordination among multiple regulators and ministries. The outcome is expected to shape the approach for future divestments in public sector banks.
The strategic disinvestment process had started in October 2021 when the government invited Expressions of Interest (EoI) from potential investors.
Once financial bids are invited and evaluated, the sale will require approval from the Cabinet Committee on Economic Affairs before completion. The transaction will mark a significant milestone in the government’s disinvestment and banking reform agenda.
Read More: Premature to talk on IDBI Bank, other deals, says Kotak Mahindra Bank CEO Ashok Vaswani
About IDBI Bank divestment
What is a Share Purchase Agreement (SPA)?
A Share Purchase Agreement is a legally binding contract that specifies the terms and conditions under which shares of a company will be sold. It outlines obligations of the buyer and seller, conditions for transfer of ownership, representations and warranties, and post-sale commitments such as management responsibilities and indemnities.
What is the role of the Inter-Ministerial Group (IMG)?
The IMG, co-chaired by the secretaries of DIPAM and DFS, oversees critical aspects of strategic disinvestment, including reviewing transaction documents, finalising the SPA, and deciding on the bid process timeline.
Who owns IDBI Bank currently?
The Government of India and the Life Insurance Corporation (LIC) jointly own about 94.71 percent of IDBI Bank. They plan to divest 60.72 percent of their combined stake to a private strategic investor, along with management control.
Why is the IDBI Bank sale significant?
This will be a key test of the government’s broader disinvestment strategy. Its success could set the precedent for future sales of public sector banks under the government’s long-term banking reform agenda.
What happens after the financial bids are received?
Once the bids are evaluated, the transaction will move for approval from the Cabinet Committee on Economic Affairs (CCEA) before closure.
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