New Delhi: The government has clarified that IDBI Bank shall not be subject to the requirements applicable to a State-run company after it is proposed stake sale, It has also applied for reclassification of its stake in the lender as ‘public’, it said in response to pre-expression of interest (EoI) queries.

The interested bidders had sought clarification on whether IDBI Bank would be under the purview of the Central Vigilance Commission and would be required to comply with the requirements under the reservation policies of the government.

In October, the government had invited expressions of interest (EoI) for stake sale as well as transfer of management control in IDBI Bank. Government, with the Life Insurance Corporation (LIC), will sell 60.72% stake in the lender.

“Bidder(s) are informed that the Government of India has already made an application for reclassification of its shareholding as ‘Public’. Further, details regarding such aspects will be given in the definitive documents shared with the QIP (Share Purchase Agreement or SPA (including qualified institutional placements at the RFP stage),” a clarification issued by the Department of Investment and Public Asset Management said (deepam, It said that the successful bidder would be required to make an open offer to acquire 5.28% public shareholding. Currently, the government holds 45.48% stake in the lender, while LIC holds 49.24%. The last date for submission of EOI is 16th December.

The department said that after the transaction there would be no obligation on the government or LIC to infuse capital into IDBI Bank. It also said that IDBI Bank is currently not under audit by the Comptroller and Auditor General.

Responding to pre-EoI queries on whether the acquirer would have the right to reconstitute the board of directors of IDBI Bank at its discretion, DIPAM said, “The definitive documents (including the SPA) will contain the detailed terms and conditions. Reconstitution of the board.”

The department, in response to a query on “asset stripping” by the acquirer, said the definitive documents (including the SPA) would contain detailed terms and conditions. “It is envisaged that fixed asset size and time frame relating to asset stripping will be provided to give operational flexibility to the successful bidder,” it said.

The government further clarified that the voting rights of the shareholders post the transaction will be governed by the extant guidelines of the Reserve Bank of India and that LIC and the government are not persons acting in association, and thus their voting rights are not cumulative.