A big decision has been taken on the privatization of IDBI Bank. The government has approved the sale of about 60 percent stake in the bank for Rs 52878 crore. Now Canada Inc company will have 60.72% stake in the bank. The government will have 15 percent stake in it, while LIC will have about 19 percent stake. The name of the bank will not be changed for the next 3 years.
Government now has 34% stake
Railway Minister Ashwini Vaishnav told during the press briefing about the decisions taken in the cabinet that the cabinet has approved the strategic restructuring of IDBI Bank. He said, for this a strategic partner has been selected and with the help of this partner new capital will be infused into the bank.
According to the Union Minister, this can be the biggest medium for FDI in the financial services sector of the country. After this restructuring, Government of India and LIC will retain 34% stake in IDBI Bank.
How much stake will LIC and government sell in IDBI Bank?
Central government and LIC have 94.72 percent stake in IDBI Bank. In this, the Central Government has 45.47 percent stake, while LIC has 49.24% stake.
As already proposed, the central government is selling its 30.48 percent stake, while LIC is selling its 30.24 percent stake. In this way, total 60.72% stake is being sold to Canada Inc. Company.
Once the deal is completed, the central government will have 15 percent stake in the bank, while LIC will have 19 percent stake. Canada.Inc company will also get management control i.e. control over bank management with 60.72% stake.
CCEA approved disinvestment
The Cabinet Committee on Economic Affairs (CCEA) had approved the strategic disinvestment of IDBI Bank. In the committee meeting M/s Canada Inc. was approved as the strategic buyer of IDBI Bank, whose parent company is Fairfax Financial Holdings Limited.
Bidding process was adopted in two phases to sell stake in the bank. In this process, investigations and decisions were taken at many levels. In this, the Inter-Ministerial Group (IMG), the Core Group of Secretaries on Disinvestment (CGD) and the Alternative Mechanism (AM) comprising the Empowered Group of Cabinet Ministers played a role.
How was the price of 60.72% stake in the bank decided?
In such deals, no fixed minimum bid price is fixed in advance. The bidding companies themselves evaluate the bank and submit their bids in a sealed envelope confidentially.
Apart from this, independent agencies also assess the fair value of the bank. Their evaluation is used as a comparative basis to check the appropriateness of the bid. This helps in assessing whether the bids made by the companies are in line with the fair value of the bank or not.
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Source: ndtv.in
