RBI clears way for IDBI Bank EoI in September

While the Centre is keen to conclude the transaction during the current financial year, it may spill over to next year if bidders seek extra time.

RBI
The buyer may get 10-15 years to reduce stake in the bank to the desired level of 26%.

With the regulators willing to provide the required flexibility in norms, the government is set to float an expression of interest (EoI) for the strategic disinvestment of IDBI Bank next month, a senior official told FE.

“Issues have been broadly resolved with the Reserve Bank of India (RBI),” the official said.

The RBI and the Securities and Exchange Board of India (Sebi) are understood to have agreed to provide a flexible glide path to reduce the promoter’s (acquirer’s) stake in the bank once the transaction is over.

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To make the deal attractive, the government had urged the RBI to give the potential buyer some leeway in complying with the regulatory norms meant for private banks, including a time-bound reduction in promoter holding. The buyer may get 10-15 years to reduce stake in the bank to the desired level of 26%.

Even though the exact size of the stake dilution is not yet clear, the government and promoter Life Insurance Corporation (LIC) may together offer to offload up to 60% stake in the lender.

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The share price of IDBI Bank closed at `40.3 on the BSE on Tuesday, up 1.13% from the previous closing price. Currently, LIC (49.24%) and the government (45.48%) hold a 94.78% stake worth about Rs 41,000 crore in IDBI Bank at the current market prices.

While the Centre is keen to conclude the transaction during the current financial year, it may spill over to next year if bidders seek extra time. Banks, non-banking financial companies and private equities evinced interest in the IDBI Bank stake in informal interactions with the government.

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