Govt and LIC to relieve over 60% stake in IDBI Bank

The Union government and Life Insurance Corporation of India (LIC) have informed that they will be divesting 60.72 percent stake in IDBI Bank. The Centre has decided to divest 30.48 percent stake, meanwhile, LIC will divest 30.24 percent in the bank.

While talking about the bidding process Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) said, “This is for the first time that we are having an open competitive bidding process for divesting in equity of a bank. This is in many respects a very unique transaction. Previously there have been transactions which were either voluntary transactions, mergers, and so on or some of the distressed banks which have been taken care of by the RBI using their extraordinary powers under the Banking Regulation Act.”

IDBI Bank became a subsidiary of LIC with effect from early 2019, following the acquisition of an additional 82.75 cr equity shares. Currently, LIC holds 49.24% stake while the government holds 45.48% in IDBI Bank.

In 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 percent following the issuance of additional equity shares by the bank under a Qualified Institutional Placement (QIP). Earlier, LIC Chairman MR Kumar had said that the company plans to retain some stake in IDBI Bank so that it continues to reap the benefits of the bancassurance channel.