according to finance ministry, IDBI Bank will continue to operate its primary dealer Business even if a foreign bank The private sector acquires majority stake and management control in the bank. IDBI The Bank is involved in market making activities for G-Secs including T-Bills as a primary dealer business. IDBI Treasury is actively engaged in primary auction of Government Bonds.

The Department of Investment and Public Asset Management (DIPAM) said in response to a query about the changes/affected in primary dealership activities where a foreign bank acquires more than 50 per cent shareholding and management control in a strategic sale. There may be no impact on the primary dealer business of IDBI Bank.”

government bond buyers and sellers registered with reserve Bank of India Also known as the primary dealer. They are authorized to purchase government securities (G-Secs) directly from the central bank, then sell them to other customers to create a market for G-Secs.

The clarification forms part of the supplementary responses to queries received from the intending bidders for IDBI Bank. The first set of responses was released last month. DIPAM had then clarified that IDBI Bank will continue to operate as an ‘Indian private sector bank’ after its strategic sale, irrespective of whether the successful bidder is a foreign bank.

The government had on October 7 invited bids for the privatization of IDBI Bank and said that along with LIC Will sell a total of 60.72 per cent stake in the financial institution. The last date for Expression of Interest (EOI) or initial bidding is December 16.

The government and LIC jointly hold 94.72 per cent stake in IDBI Bank and have offered to sell 60.72 per cent stake in the bank. The successful bidder will have to make an open offer acquisition 5.28 per cent of the public shareholding.

The intending bidders will have to pass RBI’s ‘fit and proper’ assessment at the EOI stage itself and obtain security clearance from the Government/Ministry of Home Affairs to be able to access IDBI Bank’s data room for due diligence.

DIPAM had earlier said that potential investors should have a minimum investment of Rs. net worth 22,500 crore, IDBI Bank must have reported a net profit in three of the past five years to be eligible to bid for it.

Also, a maximum of four members will be allowed in a consortium. The successful bidder shall compulsorily lock-in at least 40% of the amount equity Capital for five years from the date of acquisition.

Inputs from PTI