NEW DELHI – India’s bid to privatize IDBI Bank might face delays, potentially missing the March 2024 deadline, as the Reserve Bank of India (RBI) continues its thorough scrutiny of potential buyers. Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM), highlighted the ongoing vetting process of bids from suitors including Kotak Mahindra Bank, Prem Watsa’s CSB Bank, and Emirates NBD during a Ficci event today.
The government, alongside the Life Insurance Corporation of India (LIC), is looking to divest a 60.7% stake in IDBI Bank as part of a broader disinvestment strategy aimed at raising ₹51,000 crore ($6.5 billion). This target includes significant transactions like the IDBI stake sale and the NMDC share sale, which alone is expected to contribute over ₹10,000 crore.
However, the meticulous compliance requirements set by RBI have extended the vetting process beyond its anticipated completion in October, casting doubt on whether this key divestment will be finalized before the end of the financial year. The delay could lead to a substantial shortfall in meeting the government’s ambitious disinvestment target.
During his address, Pandey also discussed other aspects of India’s divestment policy. He called for a broader perspective that encompasses both disinvestment and dividends as targets. Despite the challenges faced with IDBI Bank’s stake sale, Pandey expressed optimism about LIC’s potential and mentioned that its stock is currently undervalued. He also noted that the government has invited bids for an asset valuer for IDBI Bank, indicating ongoing efforts towards the bank’s privatization.
In addition to IDBI Bank’s privatization update, Pandey mentioned the Maharashtra government’s recent move to exempt stamp duty on asset transfer transactions before the Shipping Corporation of India stake sale. This exemption is likely to facilitate smoother transaction processes for such large-scale divestments.
The government’s planned sale of an 11% stake in the Indian Railway Finance Corporation (IRFC) was also brought up as part of its disinvestment agenda.
Today’s event provided a comprehensive view of the government’s privatization efforts and challenges. While hurdles remain, particularly with major sales like that of IDBI Bank, authorities remain committed to their long-term divestment goals.
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