Earlier this month, India Bids were invited for 60.72% stake in IDBI Bank – 45.48% owned by the government and 49.24% owned by the state. life insurance corporation ,LIC) – after dragging his feet for years.
Securities and Exchange Board of India (SEBI), India’s capital markets regulator, mandates minimum 25% of public shareholding for all listed entities, except state-owned companies, within three years of listing.
The government has asked SEBI whether it can classify the remaining stake of around 34% of the government and LIC after the sale as a public float, which allows the new buyer to meet the minimum public shareholding criterion without diluting its ownership. One of the sources, who did not wish to be named, told Reuters.
“If SEBI allows both the government and LIC to be classified as public shareholders, then the minimum public shareholding criteria will automatically be met,” another official said.
IDBI Bank, majority owned by the government and a quasi-government firm, is currently exempted from the shareholding norm and the promoters – LIC and the government – hold 95% of the firm.
Once the government signs the share purchase agreement with the winning bidder of IDBI Bank, the criteria approved by SEBI will be shared with the buyer, said one of the officials.
India’s finance ministry did not respond to a request for comments.
slow lane
Prime Minister Narendra Modi Since coming to power in 2014, he has been trying to privatize several state-run companies. But it has had only a few successes like the sale of the flag bearer of India. Indian water grouping Bye group.
The government had first announced plans to sell IDBI Bank in 2016, but eventually switched stake to its own insurance company, LIC.
IDBI Bank’s successful majority stake to a private entity through a competitive bidding process will be the first such deal in the Indian banking sector, setting the stage for more such sales in the coming years.
In February, the government had announced the privatization of two other state-owned lenders, but the process is yet to begin.