IDBI Bank Limited slumped 3.66 percent in the early trade on November 17 after the DIPAM secretary said that stake sale may not be completed this year as some of the Reserve Bank of India's mandatory approvals were pending.
While the Department of Investment and Public Asset Management (DIPAM) said the transaction was on course, aspects such as RBI's fit and proper criteria still need to be complied with.
"We practically don't think that before March we can conclude (the sale of IDBI Bank)," DIPAM secretary Tuhin Kanta Pandey told media on the sidelines of an event organised by FICCI.
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The RBI began the fit and proper criteria back in April after Kotak Mahindra Bank, Prem Watsa-backed CSB Bank, and Emirates NBD eyed a potential stake in the Mumbai-headquartered lender.
The central bank mandates all banks to constitute a Nomination and Remuneration Committee (NRC) consisting of a minimum of three non-executive directors from amongst the board of directors.
Currently, the government owns over 45 percent of the lender, while Life Insurance Corporation of India has a 49 percent stake. The two have decided to sell about a 60.7 percent stake in the lender.
Pandey also said the divestment policy should not be looked at only through the fiscal receipts lens. "Even if we have to consider fiscal receipts, we must consider whether we should have only disinvestment as a target, or disinvestment and dividend both as a target because money is fungible," he said.
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