The government is working towards inviting financial bids for strategic stake sale in IDBI Bank by December with interested buyers having completed due diligence and data room norms, Arunish Chawla, Secretary, Department of Investment and Public Asset Management (DIPAM) said on Friday. The successful bidder will be announced by March 2026, he added.
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The long-pending stake sale process of IDBI Bank will be closely eyed as the government kickstarts the disinvestment process for the bank after being in the works for close to three years.
“Due diligence and data room protocols have been completed for all the interested parties. Also, formal consultations have been completed with qualified interested parties. We hope to invite financial bids in the third quarter of this financial year,” Chawla said, adding that once the financial bids come in and a successful bidder is selected, it will be sent to the Reserve Bank of India (RBI) for final “fit and proper” clearance.
The prospective buyer of IDBI Bank has already been granted security clearance by the Ministry of Home Affairs (MHA) and cleared fit and proper evaluation by the RBI. Along with the Life Insurance Corporation (LIC), the government had in October 2022, invited expression of interest (EoI) from investors for privatising IDBI Bank by selling a total of 60.72 per cent stake. This includes a 30.48 per cent stake of the Government of India and 30.24 per cent of LIC. In January 2023, it received multiple EoIs for IDBI Bank. On Friday, shares of IDBI Bank ended at Rs 90.17 on Friday, down 2.68 per cent from the previous close on the BSE.
What are Centre’s plans for LIC divestment?
For the other major pending disinvestment proposal for LIC which also has been in the pipeline, Chawla said the government has appointed merchant bankers and legal advisors for minority stake sale in LIC, and other public sector financial institutions.
“As far as LIC is concerned, we have completed the RFP (request for proposal) process. The process for appointment of merchant bankers and legal advisors has been completed,” Chawla said.
Earlier this year, in February, DIPAM had invited bids from merchant bankers and legal firms to assist the government in divesting its stake in public sector banks and listed financial institutions. As per the two RFPs (request for proposal) floated by DIPAM, the merchant bankers and legal advisors would be empanelled for a period of three years, which could be extended by one more year. “Individual transactions can happen anytime over the next 3 years,” Chawla said.
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The government currently holds 96.5 per cent stake in LIC. It had sold 3.5 per cent through an initial public offering in May 2022 at a price band of Rs 902-949 a share that yielded around Rs 21,000 crore. The government needs to offload another 6.5 per cent stake in the public sector life insurer to meet the mandated 10 per cent public shareholding requirement by May 16, 2027.
Banks and financial institutions need to meet the minimum 25 per cent public shareholding norm as mandated by the market regulator Sebi. Five PSU banks are yet to meet the minimum public shareholding norm. The government has set August 1, 2026 as the deadline for such non-compliant entities to reduce government holding and meet public float norms.
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