IDBI Bank jumps 11% as Cabinet may soon consider disinvestment proposal

Shares of IDBI Bank jumped 10.6 per cent to hit an intra-day high of Rs 37.4 on the BSE on Tuesday after a Business Standard report stated that the Cabinet will soon consider the proposal to sell the government’s 45.5 per cent stake in the company, paving the way for strategic divestment in the lender.

Approval will be sought to give the Department of Investment and Public Asset Management (Dipam) the authority to move ahead with the divestment process, as banks fall under the purview of the Department of Financial Services (DFS), said a senior government official, as per the Business Standard report. READ HERE

The government had planned to sell its balance stake in IDBI Bank to private, retail, and institutional investors through the stock exchange in the last financial year. However, the pandemic delayed the plan, which the government intends to complete this year. 

At 1.44 pm, the IDBI Bank stock was trading 6.21 per cent higher at Rs 35.90 on the BSE as against a 0.44 per cent rise in the S&P BSE Sensex. 

The government indirectly holds a 94.7 per cent stake in IDBI Bank through LIC. It's likely the insurer will also consider selling its stake in the bank, as the new buyer would want to hold a majority in the lender, an official had earlier said.

Last month, the RBI removed IDBI Bank from its prompt corrective action framework, easing restrictions placed on the lender.

Presenting the Budget on February 1, Finance Minister Nirmala Sitharaman had proposed to take up the privatisation of two state-run banks along with IDBI Bank in FY22.