NEW DELHI: The government will float an expression of interest (EoI) by June-end for IDBI Bank privatisation after addressing investors’ concerns regarding compliance with the regulations laid down for private banks. Currently, the bank enjoys certain relaxations being a state-run bank.
After privatisation, the compliance burden will increase, as per sources. “The investors have raised some concerns with us related to regulations laid down by Securities Exchange Board of India(SEBI) and the Reserve Bank of India for private bank. We will take these issues before them and try to make the deal attractive for the bidders,” a top government source told TNIE.
Currently, the government is holding roadshows to assess the interest for privatisation of IDBI bank and as per sources, the Centre is getting good response from institutional investors. “As per RBI rules, the promoter has to maintain a minimum shareholding in the private bank for a certain period. The promoter would not like to pare its shareholding for initial three years at least.
So the investors need some exemptions for such norms. Similarly, there are some rules in SEBI which may come in conflict with RBI norms. So we need to make a synergy between both the compliance norms,” the source stated. As per the Reserve Bank of India (RBI) rules, promoters can have a minimum stake of 40 per cent of the paid-up voting equity share capital of the private bank for the first five years.
The government and Life Insurance Corporation together hold 95% stake in IDBI. The Centre had announced its disinvestment plans for IDBI bank in February 2021. It was hoping to complete the privatisation by March 2022.
Meanwhile, the Centre is also expecting to complete the strategic disinvestment in Bharat Earth Movers Ltd (BEML). It hopes to raise Rs 800-Rs 1,000 crore by offloading 26% stake in BEML. According to sources, the Ministry of Corporate Affairs (MCA) is looking into the demerger scheme of non-core assets of BEML.