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The government on Wednesday cleared a proposal for strategic disinvestment of IDBI Bank Ltd, boosting efforts to meet its ambitious Rs 1.75 lakh crore disinvestment target for this fiscal year.
The proposal was approved by the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi. It involves the sale of a majority stake in the bank jointly by the government and Life Insurance Corporation of India (LIC), along with management control.
The Union government and LIC own 45.48 per cent and 49.24 per cent, respectively, in IDBI Bank, giving them a combined stake of more than 94 per cent. LIC is currently the promoter of IDBI Bank with management control after the government sold its majority stake to the state-run insurance giant in 2019.
However, the government and LIC may not fully sell their stakes and instead retain minority holdings post the strategic disinvestment. “The extent of respective shareholding to be divested by GoI and LIC shall be decided at the time of structuring of transaction in consultation with the RBI,” the cabinet secretariat said in a statement. A finance ministry official said on condition of anonymity that the government will appoint advisers for the transaction and, in due course, issue the preliminary information memorandum inviting expression of interest for the stake sale.
IDBI Bank on Monday reported a full-year profit for the first time in five years at Rs 1,359 crore for 2020-21. The lender had reported a loss of Rs 12,887 crore in fiscal 2019-20.
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