The Reserve Bank of India (RBI) is likely to soon relax its norms related to the cap on maximum shareholding to facilitate the sale of the government’s and LIC’s stake in IDBI Bank.
According to a report by The Times of India (TOI), the Department of Investment and Public Asset Management (DIPAM) has also requested the RBI to allow a “check” for the ones who submit an expression of interest, before opening the bidding process.
Usually, this check is done after the bids are received and the winner is shortlisted. In IDBI stake sale, the bids may only be invited from those who stand DIPAM’s scrutiny.
If the RBI agrees, DIPAM may start the process over the next few weeks, the report added.
The largest stake in IDBI is currently held by the LIC. It holds 49.2 per cent of all the shares in the bank. It is followed by the government, which holds 45.5 per cent.
The government is confident about the financial health of IDBI and stated that it offers a good proposition to potential investors. Corporate entities, however, are not allowed to bid for IDBI. Consortiums formed by multiple shareholders are expected to bid for the stake.
Currently, RBI has set in a mandatory lock-in period for the first five years, with a minimum holding of 40 per cent. Subsequently, it can be reduced to 26 per cent. However, in the case of IDBI, these norms might be relaxed.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.