The critical part of the privatisation of IDBI Bank will begin after Holi, with transaction adviser KPMG India expected to hand over the relevant documents submitted by the bidders at the expression of interest (EoI) stage to the Reserve Bank of India (RBI) and the Union home ministry.
RBI will have to undertake the mandatory “fit-and-proper assessment” of the bidders, while the ministry will verify their antecedents for security purposes.
According to sources, access to the data room of the bank will be opened to the bidders who remain qualified after the vetting by the two agencies. Financial bids will be invited after all the shortlisted bidders are satisfied with the information provided to them, the sources added.
“The entire process will be fully transparent and background checks of all bidders will be done to make the transaction smoother,” an official said.
Officials reckon that it won’t take much time to complete the transaction in FY24 after financial bids are called since the fit-and-proper and security clearances would have taken care of all other aspects of the deal.
On January 7, the Centre received multiple expressions of interest (EoIs) from domestic and foreign investors for the 60.72% stake in IDBI Bank
For fit-and-proper assessment, the time to be taken by RBI will be lesser for institutions which were already in the regulatory purview of the central bank such as domestic banks or NBFCs. For international bidders, the time taken could vary if some of the bidders happen to be those who have never come in contact with RBI for regulatory purposes. In such cases, RBI might seek information from its overseas counterparts.
On the other hand, the home ministry would get details from various authorities, including police departments (domestic and if necessary, overseas), income tax and indirect tax authorities among others, to check the antecedents of the bidders and their management.
The IDBI Bank deal was sweetened for investors as the government, markets regulator Sebi and RBI have extended necessary regulatory forbearance.
Foreign banks, funds and investment vehicles incorporated outside India were allowed to bid for IDBI Bank.
These include an extended period for complying with the minimum public shareholding (MPS) norms and relief from tax on notional gains if the share price of the bank rises post financial bids up to transaction conclusion.
IDBI Bank shares closed at Rs 48.15 on the BSE