IDBI Bank rallies as govt gears up to cut stake in lender

NEW DELHI: Shares of IDBI Bank closed higher by 4.54 per cent in Monday's trade amid reports that the government is trying to get at least two large institutional investors to buy its stake in state-run IDBI Bank, a move aimed at transforming the lender along the lines of private sector rival Axis Bank.

"Initial discussions have been held with some players who evinced interest," a senior government official told the Economic Times on condition of anonymity, adding that: "The government has already shown its intent in transforming the bank and is open to offering board seats to such investors."

The stock rallied 6.03 per cent to hit a high of Rs 71.20 on BSE. By 9.33 am, a total of 6.09 lakh shares had got changed hands on the counter, compared with a two-week average of 8.25 lakh shares on the exchange.

In his Budget speech on February 29, Finance Minister Arun Jaitley had said that IDBI Bank's transformation process has already begun. "The government will take it forward and also consider the option of reducing its stake to below 50 per cent," the FM had said.

The public sector lender has taken an approval for a qualified institutional placement (QIP) of Rs 3,771 crore.