The Cabinet Committee on Economic Affairs (CCEA) on Wednesday gave its in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank.
The extent of respective shareholding to be divested by Central government and LIC would be decided at the time of structuring of the transaction in consultation with the RBI, an official release said.
IDBI Bank’s ownership
The Central government and LIC together own more than 94 per cent of equity in IDBI Bank. While the government owns 45.48 per cent stake, the shareholding of LIC in IDBI Bank stands at 49.24 per cent.
LIC is currently the promoter of IDBI bank with management control while the Central government is the co-promoter.
LIC’s Board has passed a resolution to the effect that the insurer may reduce shareholding in IDBI Bank through divesting its stake along with strategic stake sale as envisaged by the government with an intent to relinquish management control and by taking into consideration price, market outlook, statutory stipulations and interest of policyholders.
The decision of LIC‘s Board is also consistent with the regulatory mandate to reduce its stake in the bank. It is expected that the 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 assistance/funds, the release added.
Resources through strategic disinvestment of government equity from the transaction would be used to finance developmental programmes of the government benefiting the citizens, the release added.