Union government, LIC to divest over 60 per cent stake in IDBI Bank

The Union government and Life Insurance Corporation of India (LIC) informed that they will be divesting 60.72 per cent stake in IDBI Bank on Friday.

Expressions of Interest (EoIs) from likely bidders will be invited on October 7, said the Department of Investment and Public Asset Management (DIPAM).

The Centre has decided to divest 30.48 per cent stake, meanwhile, Life Insurance Corporation of India (LIC) will divest 30.24 per cent in the bank. Currently, LIC holds 49.24% stake while the GoI holds 45.48% in IDBI Bank.


"It has now been decided that pursuant to the strategic disinvestment of IDBI Bank (i) GoI shall sell such number of shares representing 30.48 % (thirty decimal four eight percent); and (ii) Life Insurance Corporation of India (“LIC”) shall sell such number of shares representing 30.24 % (thirty decimal two four percent), aggregating to 60.72% (sixty decimal seven two percent) of the equity share capital of IDBI Bank, along with transfer of management control in IDBI Bank," stated a press release.


"This is for the first time that we are having an open competitive bidding process for divesting in equity of a bank. This is in many respects a very unique transaction. Previously there have been transactions which were either voluntary transactions, mergers, and so on or some of the distressed banks which have been taken care of by the RBI using their extraordinary powers under the Banking Regulation Act," said Tuhin Kanta Pandey, Secretary, DIPAM.

While talking about the bidding process Pandey revealed that there is no preference except the best bid. "And about who all come in, we have put it out after having extensive discussions with RBI. We are well within the RBI’s current policy of excluding industrial and corporate houses from banking control because they cannot be promoters and they cannot also put in directors so therefore they are really excluded."

The Cabinet Committee on Economic Affairs had given in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May 2021.

IDBI Bank became a subsidiary of LIC with effect from January 21, 2019, following the acquisition of an additional 8,27,590,885 equity shares.

On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 per cent following the issuance of additional equity shares by the bank under a Qualified Institutional Placement (QIP).

Earlier, LIC Chairman MR Kumar had said that the company plans to retain some stake in IDBI Bank so that it continues to reap the benefits of the bancassurance channel.

"Going forward, we would like to have some stake in IDBI Bank. The whole idea of us picking up stake in the bank was strategic in nature and that has not gone away at all," PTI had quoted Kumar as saying.

The government has set a target of Rs 65,000 crore from divestment in 2022-23 (April-Mar), out of which it has already raised Rs 24,544 crore.