What MoS Finance said about IDBI Bank Privatisation in Lok Sabha?

The Indian government has started the process of evaluating qualified bidders for the privatisation of IDBI Bank, Minister of State for Finance Pankaj Chaudhary announced on Monday. The government, along with the Life Insurance Corporation of India (LIC), plans to sell a combined 61% stake in the bank. This includes 30.48% held by the Government of India and 30.24% owned by LIC.

The process began in January 2023 when the Department of Investment and Public Asset Management (DIPAM) received multiple Expressions of Interest (EoI) from potential buyers. These EoIs were submitted by parties interested in purchasing a stake in IDBI Bank.

Choudhury in a written reply in the Lok Sabha, explained that the qualified bidders are now undergoing a due diligence process. This step follows security clearances from the Ministry of Home Affairs (MHA) and a “fit and proper” evaluation by the Reserve Bank of India (RBI). Once these clearances are completed, investors will gain access to the bank’s data room to begin their detailed assessment.

Currently, the government holds 45.48% of IDBI Bank, while LIC owns 49.24%. The proposed sale will reduce the government’s stake significantly, marking a major step in the privatisation of the bank.

When asked about the concerns of IDBI Bank employees regarding the privatisation, Chaudhary assured that the government is taking steps to address their worries. He stated that the terms and conditions of the strategic sale will include provisions to protect the legitimate concerns of existing employees and other stakeholders. These provisions will be outlined in the share purchase agreement.

The privatisation of IDBI Bank is part of the government’s broader plan to reduce its role in the banking sector and improve efficiency. The due diligence process is a critical step in ensuring that the bank is handed over to capable and qualified investors who can manage it effectively. Further updates on the sale are expected as the process moves forward.