The government will work with the market regulator and the central bank to facilitate the process of divestment in IDBI Bank, which will conclude by the first half of FY24, a top official said.
Domestic and foreign institutions have submitted expressions of interest for the 60.72 percent stake in IDBI Bank offered by the government and Life Insurance Corporation of India, along with the transfer of management control.
“We have had good response to IDBI Bank. As per our process, we don’t reveal the names and number of EOIs received,” Tuhin Kanta Pandey, secretary in the Department of Investment and Public Asset Management, told Moneycontrol.
The IDBI Bank divestment is unique because a transaction in the banking space will be done through competitive bidding for the first time. In the past, banks have usually been bailed out.
The next steps include a fit and proper verification by the Reserve Bank of India and due diligence.
“So that we don’t get into any difficulties in the future, the qualified parties will have to be tested by the RBI. Only then will we move to the due diligence stage.
This stage will be taken only after they pass the test by RBI,” said Pandey.
LIC held a 49.24 percent stake in IDBI Bank while the government-owned 45.48 percent as of March 31, 2022. The government is looking to sell 30.48 percent and LIC 30.24 percent.
Bids for Concor
On concerns over government ownership and LIC’s residual stake, Pandey said the government and LIC would like to exit completely and the timing would depend on the upside after the disinvestment.
On the divestment pipeline, Pandey said that since the railways has cleared the policy on land lease, the government is working on getting expressions of interest for the Container Corporation of India (Concor).
He said the government had received Rs 32,000 crore through divestment and Rs 36,000 crore from dividend. The government had set a divestment target of Rs 65,000 crore for FY23.
“One of the points has been that we have to keep in mind that budgeting has been under extreme uncertainties… every budget had major cataclysmic events.
We also had several inflation-related issues… The oil industry went into a lot of upheavals – one major transaction couldn't go through at the time,” he said.
The market plays a key role. A certain budget target is arrived at subject to market conditions. Divestment is dependent on several circumstances, he said.
“Our best effort would be to achieve whatever target the finance minister sets,” Pandey said, referring to the target for FY24.
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