LIC & Govt Plans for Strategic Sale of IDBI Bank

The government has cleared that the strategic sale of IDBI Bank, in what would be the first instance of the disinvestment policy being used in the banking sector - so far a no-go area.

The official statement says, "The extent of respective shareholding to be divested by GoI and LIC shall be decided at the time of structuring of transaction in consultation with RBI," an official statement said.

LIC being the shareholder with 49.2 persent stake, and has classified as the promoter and hold management control. The Centre, which is a 45.5 percent owner, is the co-promoter. However, the statement said that the LIC board passed a resolution allowing the state-run insurance giant - which is due for a listing - to divesting its stake along with strategic stake sale.

It adds, "It is expected that strategic buyer will infuse funds, new technology and best management practices for optimal development of business potential and growth of IDBI Bank and shall generate more business without any dependence on LIC and government funds."

Over the last two decades, IDBI is attested to be the Centre's vehicle for experiments, with successive finance ministries experimenting out a new model.

IDBI, is a development financial institution, and later transformed into a bank with the seeds for change sowed when Yashwant Sinha was the FM. Similar to ICICI, the government had anticipated to alter IDBI into a financial conglomerate but was weighed down by legacy term loans.

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