Ahead of the privatisation of IDBI Bank, the government has reached out to the regulators to seek relaxations for the potential buyers on the glide path to reduce shareholding. ET Now learns that the government and central bank are also discussing fit & proper criteria to keep Chinese money at bay.
“We are in talks with the regulator on what the glide path should look like. When a new buyer takes control of IDBI Bank, we will have to give some leeway on reducing the shareholding,” an official told ET Now.
RBI’s guidelines mandate that private bank promoters bring down their shareholding in the bank to 40% within three years, 20% within 10 years and 15% within 15 years of obtaining their license.
The government owns 45.48% in IDBI Bank while LIC owns 49.24%. As a part of the privatisation, the combined stake of both may be put on the block.
ET Now learns a final call on the stake on offer will be decided at the RFP (Request for Proposal) stage. Meanwhile, the legal and transaction advisors for the privatisation will also be appointed soon.
”We are also discussing the Fit & Proper guidelines for the new buyers. We are discussing if only financial institutions could be allowed to pick up stake in IDBI Bank or can we widen the ambit. We also don’t want Chinese money or investors in our financial system so adequate firewalls will be built in,” another source added.
IDBI Bank turned profitable in FY21 after five years as the private sector lender reported a net profit of Rs 1,359 crore for the financial year against a net loss of Rs 12,887 crore in FY20.
