MUMBAI: The Reserve Bank of India (RBI) has begun evaluating the bids for IDBI Bank, showing that the process of divestment of government-owned lender is on track.
Kotak Mahindra Bank, Canadian investor Prem Watsa-backed CSB Bank and UAE- based Emirates NBD are among the five bidders keen to take control of IDBI Bank in which government holds a majority stake.
The government owns 45.48% of IDBI Bank and is planning to divest a 30.48% stake in the lender while Life Insurance Corporation of India (LIC), which holds 49.24%, plans to offload 30.24%
“The central bank is assessing expression of interest of ‘a number of bidders’. RBI does not comment on individual cases,” said a source.
The development comes after the government received bids from ‘multiple bidders’ for IDBI stake sale.
After getting the bids, the expressions of interest are sent to the central bank to check whether they pass the ‘fit and proper’ criteria.
A potential bidder can acquire a majority stake in domestic banks only after passing the ‘fit and proper’ test, which includes extensive background and financial checks by the RBI.
Reacting to the news, shares of IDBI Bank surged 10% on the BSE on Thursday.
The government’s stake sale in the bank is crucial as it will set the course for divestment of other public sector entities.
Regulators have cleared the decks for divestment of IDBI Bank by giving the required approvals.
In January, capital markets regulator Securities and Exchange Board of India (Sebi) allowed the central government to classify its stake in the bank as ‘public’ after its stake sale on the condition that its voting rights don’t exceed 15% of the total voting rights of the bank.
As per the Sebi, the government’s intent to reclassify its shareholding as the public must be specified in the offer document at the time an open offer is made by the new acquirer of the lender. Currently, the government is classified as a co-promoter of the lender.
As per the recent announcement by IDBI Bank, Sebi has directed the new buyer to comply with minimum public shareholding norms within one year of the sale.