Maintained complete integrity for IDBI privatisation: Dipam secy Chawla

DIPAM Secretary Arunish Chawla discusses the ₹52,878 crore IDBI Bank stake sale, Fairfax's RBI clearance, disinvestment plans, capital receipts and the government's dividend outlook.

 Department of Investment and Public Asset Management (DIPAM) secretary Arunish Chawla in an in-person interview with Krity Ambey and Asit Ranjan Mishra fleshes out the details of the IDBI Bank privatisation and the way forward for the government’s disinvestment plan. Edited excerpts:

 

How much will the government get in proceeds from the IDBI stake sale, and how much do you expect to get through dividends from LIC?

 The purchase consideration for this transaction is ₹52,878 crore – 30.48 per cent equity is being sold by the Government of India and 30.24 per cent by LIC, which is almost half-half. The government gets slightly more. We expect the government will get about ₹26,500 crore and LIC about ₹26,300 crore.

 

LIC has already paid the dividend for FY 25-26 in the current financial year. Financial institutions pay dividends once a year, so for this year LIC will pay dividends to its shareholders in the next financial year. We will cross that bridge when we come to it. It will be decided in the next financial year, on the basis of the audited books of account at that time.

 You said there were two techno-financial bidders at the end, out of five. Who was the losing bidder, and how much did it bid?

 

It would not be appropriate for me to disclose the names of individual bidders. Bidding is a confidential process, and we hold this information in fiduciary capacity. Without written consent we cannot reveal individual names.

 

But in the case of Air India, the name of the losing bidder was revealed?

 I cannot comment. Air India was a different process. Maybe he consented to it. As far as the sanctity of the process is concerned, we have maintained complete integrity.

 

You also don't want to reveal the gap between the bids?

 Bidding strategies are secret to the qualified parties. They are also listed entities, with their own markets, regulators and investors. Revealing any information beyond our fiduciary responsibility creates complications for either side. That is why it is governed by a confidential process.

 

The names of the professional valuation agencies have also not been revealed?

 

There were a number of professional advisors in this process: Transaction advisors, legal advisors and valuation advisors. All their professional inputs and advice are given to us with confidential guarantees, and without their written consent no individual names or details can be given.

 

Has this been the practice in all earlier strategic investments too?

 In most. Without the written consent of the parties concerned, no individual name beyond the successful bidder can be revealed. These are professional entities with market standing and strict protocols. Both sides are bound by the protocols.

 

How much were the land and properties owned by IDBI valued at?

 I can tell you the methodology; the finer details are in the valuation reports. The two most important properties are the leased property in Mumbai, which is the headquarters, and the allotted property in Hyderabad, which is a training centre. The rest are smaller offices and branches, some of which are rented out.

 

For these properties, particularly the two main ones, the asset valuation advisor researched the title papers and the land covenants and did a fair valuation at market rates. The Mumbai property is leased, so it has a fair market value for the lease and was valued in accordance with the residual term of the lease. The Hyderabad training centre is allotted specifically for training purposes. It cannot be transferred to anyone in any form and is not marketable. So any independent professional valuer will value it on the basis of the land covenants. If you compare the final outcome with the book value, you see a significant difference between the two, which tells you the valuers have done a fair job.

 

The transaction took more than four years. What are the learnings from the IDBI Bank privatisation?

 

The first learning is that this is the first time we have strategically restructured a bank. All the earlier cases were CPSEs (central public sector enterprises), and there was no document or experience ever prepared for a bank. The Reserve Bank of India comes into this transaction with its own guidelines and regulations, and the banking law has to be respected. There are also multiple parties: the Government of India, LIC, the bank itself, the bidding entity, a parent entity, and multiple qualified parties. Everyone had to be consulted to arrive at a commonly agreed document. The most important learning was how to strategically restructure a bank. Model documents were prepared for the first time, which is why the process was so complex and difficult. That is a big achievement.

 

Secondly, our standard operating procedures (SOPs) are designed for a typical unlisted CPSE. There are no SOPs for a listed entity where the stock market is playing havoc. How to handle that situation is an art in itself.

 

The third learning was: Don't give up. It is a difficult process. The CGD (core group of secretaries on disinvestment) has been delegated special powers by the Cabinet to remove all difficulties and achieve the outcomes desired by the Cabinet, and decisions are taken collectively, pooling the wisdom of the best minds in government. It was stressful and took a long time, but looking back, all that hard and extra work was worth it. History was written on 14 October 2026: the first bank privatisation after nationalisation.

 

Will this experience help you if the government asks you to privatise another public sector bank?

 

No comment. The task belongs to some other department, and you should address the question to them.

 

Realistically, where do you see miscellaneous capital receipts in March?

 

We have already collected ₹62,000 crore as capital receipts. The past is history, the future is a mystery. Whatever will be, will be. I don't want to give any numbers at this stage.

 

How does the pipeline look from here?

 

The momentum will continue.

 

When you say momentum will continue, is that in terms of strategic disinvestment, or all sorts of stakes?

 

Both. This one was strategic restructuring, but what I meant was essentially capital receipts, and capital receipts means all kinds: disinvestment, asset sales, and other forms of capital recycling such as InvITs and asset monetisation.

 

Fairfax holds a stake in a bank, and it has made some announcements regarding its insurance and asset management businesses. Will the merger happen first and then they go to the RBI, or will RBI clearance come first?

 

They will present a plan to the RBI. In that plan they will state what they will do with their existing stake in Catholic Syrian Bank – whether they will merge it or exit it. There are two businesses, the fintech business (IIFL) and GoDigit Insurance, and IDBI itself has subsidiaries. All of them will have to be restructured and brought under one umbrella. They will submit a plan for that, and once the RBI is happy with it and gives clearance, we will go ahead.

 

Is Fairfax required to restructure its business before the RBI gives clearance?

 The RBI has given an option. It has said in writing that they have two years to decide and carry out merger or exit, but finally they can keep only one bank licence. The RBI will give clearance once the entities submit a satisfactory plan.

 

How much dividend do you expect this year? Will it cross last year's target?

 

This year, as you know, is difficult on the oil front. The dividend review process will start now, because the CPSEs are holding their annual general meetings, and that is when a clear picture emerges. There will be some shortfalls in the oil sector because of the geopolitical situation. But we are doing fresh listings, which will help us get special dividends, and we will try to bridge the gap.

 

The target for this year is ₹75,000 crore. We are working towards it. Fingers crossed; let's hope for the best.