Government, LIC together likely to sell 60% stake in IDBI Bank

The government and Life Insurance Corporation (LIC) together are likely to offer 60 percent stake for sale in the IDBI Bank divestment, sources told CNBC-TV18 on Tuesday, adding that the Expression of Interest (EoI) will be invited by October.

CNBC-TV18 had earlier reported that the government and LIC could sell up to 65 percent stake in IDBI Bank.

The government and LIC own nearly 94 percent in IDBI Bank. While the Centre owns 45.48 percent stake, LIC held 49.24 percent as of June 30, data has shown.

The government will be seeking the Reserve Bank of India's (RBI) due diligence at every stage in the divestment process.

There is no cap on promoter holding subject to submission of a plan to reduce stake in 15 years. However, the 26 percent voting rights cap stays for the divestment.

The IDBI Bank stock was trading 0.46 percent higher at Rs 43.55 per share at the time of writing.

In Budget 2021, the Government of India had announced its intention to exit IDBI Bank. The disinvestment strategy refers to the sale or liquidation of government-owned assets.

Governments use disinvestment to reduce their fiscal burdens and raise money for public needs. They may also be done to privatise the assets.

The IDBI Bank stake sale has seen multiple ups and downs and the process has been delayed by months. Initially, the government planned to invite EoI in May, however, the process got delayed with its attempt to try to reach out to potential buyers and bidders.