IDBI Bank strategic disinvestment green flagged by Cabinet

Prime Minister Narendra Modi headed the Cabinet Committee on Economic Affairsapproved the plan for strategic disinvestment and transition of management control of IDBI Bank on Wednesday.

In a press release, the CCEA, which is presided by Prime Minister said that the amount of shareholding to be divested by the Centre and Life Insurance Corporation would be determined at the time of deal shaping in consultation with the Reserve Bank of India.

After the strategic disinvestment, the government and LIC may not totally divest their stakes in IDBI Bank, and each may retain a minority interest in the bank.

Government in its statement said, "The extent of respective shareholding to be divested by GoI and LIC shall be decided at the time of structuring of transaction in consultation with Reserve Bank of India."

IDBI Bank's equity 94% is owned by the Government of India and the Life Insurance Corporation of India. The amount of shareholdings to be divested by the Government of India and the Life Insurance Corporation of India will be determined at the time of deal structuring in consultation with the Reserve Bank of India.

The LIC board of directors has issued a resolution that the LIC may reduce its stake in IDBI Bank by divesting its stake in conjunction with a strategic stake sale proposed by the government, with the goal of giving up management control and taking into consideration price, market outlook, statutory requirements, and policyholder interests.

The strategic buyer is expected to inject capital, advanced technologies, and best management practises for the optimum creation of IDBI Bank Ltd.'s market capacity and expansion, and to generate more business without relying on LIC or government assistance/funds.