IDBI Bank stock falls 3% as govt cancels invitation process to appoint divestment asset valuer

The government, in conjunction with the Life Insurance Corporation (LIC), has been actively seeking to divest its holdings in IDBI Bank

Shares of IDBI Bank fell more than 3 percent on November 22 morning after the government cancelled the bid invitation process to appoint an asset valuer for the lender's divestment.

The Centre will call for a fresh request for proposal (RFP) for appointing the asset valuer. This cancellation comes after the government extended the RFP four times.

The government, in conjunction with the Life Insurance Corporation (LIC), has been seeking to divest its holdings in IDBI Bank. The government holds a 45 percent stake in the lender and LIC 49.24 percent. The two have jointly decided to sell a 60.7 percent stake in the bank.

This January, the government received multiple preliminary bids for the strategic sale.

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In this strategic divestment initiative, the asset valuer would be responsible for conducting a thorough evaluation of multiple facets of IDBI Bank. This entails determining the fair value of the bank's investments, loans, and advances, with the aim of presenting a comprehensive overview of its financial portfolio.

The valuation process would include a scrutiny of IDBI Bank's deposits, borrowings, and other liabilities to attain a comprehensive insight into the financial position of the institution.

Through the appointment of an asset valuer to evaluate the bank's financial well-being, the government seeks to promote transparency and fairness in the valuation proceedings.

At 9:53 am, IDBI Bank shares were trading 2.9 percent lower at Rs 60.45 on the National Stock Exchange. So far in 2023, the stock has risen around 9 percent in line with the rally in the benchmark Nifty 50.

Also Read | Govt cancels bid for appointing asset valuer for IDBI Bank, fresh RFP to be issued

Earlier this month, a senior government official said that the proposed stake sale in IDBI Bank may not be completed by March 2024. Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Monetisation (DIPAM), said the transaction was on course but there were aspects like the RBI’s fit and proper criteria that needed to be complied with.

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