FinMin may complete privatisation process of IDBI Bank by March 2025

The Union Ministry of Finance is expecting to complete the privatisation process of IDBI Bank by March 2025, according to a senior government official familiar with the matter.

 

“As the Reserve Bank of India (RBI) has issued the ‘fit and proper’ certificate to the shortlisted bidders, the government is moving at full pace on the disinvestment of IDBI Bank, aiming to complete it by this financial year. We will give access to the virtual data room to the bidders by the second week of November,” said the official. 

The government and Life Insurance Corporation (LIC) plan to sell a 60.72 per cent stake in IDBI Bank. As on December 31, 2023, LIC holds 49.24 per cent of IDBI Bank, while the government owns 45.48 per cent. 

“KPMG, the transaction adviser, is facilitating the process by providing access to the bank’s data room for evaluation and addressing any queries. The next step involves finalising the draft Share Purchase Agreement in collaboration with the bidders,” the official added. 

In the FY17 Union Budget, the government proposed reducing its stake in IDBI Bank to below 50 per cent. The strategic stake sale is seen as a test case for the government’s public-sector enterprise policy to reduce its presence in business. The Department of Investment and Public Asset Management (DIPAM) had received multiple expressions of interest for the proposed stake sale and transfer of management control in IDBI Bank. 

The government forwarded bidders’ details to the RBI in January 2023. “One reason for the delay is the involvement of multiple players — private equity firms, NBFCs (non-banking financial companies), a consortium — and not just banks (who are in the fray). In that case, the conditionalities are also detailed,” the official said. 

The government received expressions of interest (EoIs) from multiple bidders on January 2, 2023. Once the RBI approves, the eligible bidders will conduct their due diligence on the bank. 

“If a bank successfully bids to buy IDBI Bank, the promoters will be granted a reasonable period to merge the two entities in order to meet the RBI’s requirement that a promoter or promoters can hold only one bank licence,” according to source. 

About the further disinvestment of other public-sector units, a senior government official said the pace of disinvestment would be slow in the current financial year. 

“This year, we are expecting a slow pace in terms of disinvestment. Any disinvestment process requires lots of effort. Rather, we are focusing more on the growth of companies,” added the official. 

The privatisation of the state-owned Shipping Corporation of India (SCI) could be delayed beyond FY25, as the Centre has been unable to resolve “documentation issues” with the state government following the demerger of its non-core assets, according to a senior government official who requested anonymity.

 

“There has been no further progress on SCI disinvestment. Some finance ministry officials went to Mumbai, followed up with the collector, and reviewed the situation. However, it’s not progressing quickly," said the official.

 

The government has stopped setting a separate disinvestment target beginning in FY24. The FY25 Union Budget has set the target for miscellaneous capital receipts, including disinvestment, at approximately Rs 50,000 crore, compared to the revised estimate of Rs 30,000 crore for FY24.