IDBI Bank privatisation: Govt likely to extend deadline to receive bids until January 2023

The government is likely to grant an extension until early January 2023 for receiving bids to meet the 25 percent minimum public shareholding criteria for the privitisation process of IDBI Bank, an official told CNBC-TV18 on Friday.

The earlier deadline to submit expressions of interest (EOI) for privatisation ends on December 16.

According to the government official cited above, a transaction advisor is said to have requested for the extension of the timeline. The advisor has asked for bids to be submitted as the Reserve Bank of India’s (RBI) criteria.

The development comes as the latest deadline is nearing and the government plans to offload 30.48 percent of its stake in IDBI Bank, along with another 30.24 percent stake held by the Life Insurance Corporation of India. The winning bidder will get a 60.72 percent shareholding and management control of the lender.

The Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey had earlier told CNBC-TV18 that the IDBI Bank transaction is the first one that is based on competitive bidding.

"This is a process based on open competitive bidding and therefore it is a unique experience for the government and also to some extent for the RBI," he said. While talking about the eligibility criteria for the bidding, Pandey said that the RBI's guidelines have got rationale. The bids can be submitted as part of a consortium or by single entities.

Banks, shadow banks, foreign lenders, alternate investment funds as well as offshore funds have been allowed to place bids. However, large industrial and corporate houses as well as individuals are not eligible to bid.

In terms of pricing of the open offer, it is going to be the same as the bid price. SEBI has ruled that at the price at which the winning bid is made, the strategic buyer will have to quote the same price for the open offer. This will also apply to all privatisations in the future.