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Government and LIC to cooperatively divest 60.72% share in IDBI Bank

LIC to divest 60.72% share in IDBI Bank: The government announced that it and LIC would sell a combined 60.72 percent share in IDBI Bank in order to privatise the banking institution. In order to be qualified to bid for IDBI Bank, the Department of Investment and Public Asset Management (DIPAM) stated that potential investors needed to have a minimum net worth of $22,500 crore and net profits in three of the previous five years.

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LIC to divest 60.72% share in IDBI Bank: Key Points

  • A consortium could only have a total of four members.
  • The winning bidder would be obligated to lock-in at least 40% of the equity capital for a period of five years starting from the date of acquisition.
  • Additionally, it stated that the Reserve Bank will choose the qualified interested parties and the equity position these firms would hold in IDBI Bank, and that the bidder would need to pass the banking regulator’s “Fit and Proper” evaluation.
  • Additionally, it prohibited individuals or big corporations from taking part in the bidding process.
  • Potential purchasers have until December 16 to submit offers or Expressions of Interest (EoI).

Ownership of IDBI Bank

  • Together, the government and LIC own 94.72 percent of IDBI Bank. The government owns 488.99 billion shares, or 45.48 percent of IDBI Bank, while Life Insurance Corporation (LIC) has 529.41 billion shares, or 49.24 percent of the bank. In the bank, public shareholders own 5.2 percent of the stock.
  • The Department of Investment and Public Asset Management (DIPAM) announced the sale of the government’s holding and LIC’s investment, totaling 60.72 percent of the equity share capital of IDBI Bank, along with the transfer of management control of the bank.
  • The total shareholding of LIC and the government will drop to 34% after the stake sale.

IDBI Bank Shareholding Pattern

  • 5.2% of IDBI Bank’s shareholders are small business owners.
  • Additionally, when filing the EoI, the interested parties and each consortium member must make a statement or disclosure on any orders, pending investigations, or proceedings by any court, regulatory authority, SFIO, NCLT, or NCLAT.
  • The winning bidder will be obliged to align its shareholding with the RBI criteria by reducing or diluting its stake in accordance with the glide-path that will be given by the QIPs at the RFP stage.

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