Advanced Stage of RBI’s Vetting Process for IDBI Bank Sale
The Reserve Bank of India’s (RBI) review of potential bidders for IDBI Bank’s stake sale is progressing well, as reported by Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM). This development marks a significant step in the strategic disinvestment of IDBI Bank, which is owned jointly by the Centre and Life Insurance Corp of India (LIC).
Major Stakeholders and Their Plans
The Center holds a 45.48 percent stake in IDBI Bank, while LIC possesses 49.24 percent. Together, they aim to divest 60.7 percent of their combined holdings in the bank. This substantial stake sale is part of a broader initiative to meet the government’s monetization goals for the fiscal year 2023-2024, which targets Rs 51,000 crore.
IDBI Bank’s Market Performance
Recently, IDBI Bank’s shares have seen a notable increase, reaching over a 3 percent rise on the trading day. Year-to-date, the shares have appreciated by 33 percent, reflecting positive market sentiment and investor confidence.
Due Diligence and Approval Process
In a July 23 interview with Moneycontrol, Pandey highlighted that while the vetting process by the RBI is thorough and taking time, it is crucial for ensuring the eligibility of bidders. The process involves assessing whether bidders meet the ‘fit and proper’ criteria, which includes having a minimum net worth of Rs 22,500 crore and demonstrating net profits in three out of the last five years.
Timeline and Bidding Progress
The RBI’s vetting process, initiated in April, follows the submission of initial bids by Kotak Mahindra Bank, Prem Watsa-backed CSB Bank, and Emirates NBD. These bidders are competing to acquire a majority stake in IDBI Bank, signaling strong interest in this significant investment opportunity.
Recent Financial Performance of IDBI Bank
On July 22, IDBI Bank announced a robust 40 percent increase in its net profit for the first quarter of FY25. This strong financial performance underscores the bank’s growth potential and adds to the attractiveness of its stake sale.
Conclusion
As the RBI’s review process advances, the future of IDBI Bank’s strategic disinvestment remains a focal point for investors and stakeholders alike. The outcome will be pivotal in achieving the government’s monetization objectives and shaping the bank’s future trajectory.
Original Source: Moneycontrol
