The Cabinet Committee on Economic Affairs (CCEA) yesterday gave in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank Limited. LIC is currently the promoter of IDBI Bank with Management Control and Government of India is the co-promoter.
The extent of shareholding to be divested by Government of India and LIC shall be decided at the time of structuring of transaction in consultation with RBI. The Government of India and LIC together own more than 94 per cent of equity of IDBI Bank. The Government of India owns 45.48 per cent and LIC 49.24 per cent.
LIC’s Board has passed a resolution to the effect that LIC may reduce its shareholding in IDBI Bank through divesting its stake along with strategic stake sale envisaged by the Government with an intent to relinquish management control and by taking into consideration price, market outlook, statutory stipulation and interest of policy holders. This decision of the LICs Board is also consistent with the regulatory mandate to reduce its stake in the Bank.
It is expected that strategic buyers will infuse funds, new technology and best management practices for optimal development of business potential and growth of IDBI Bank Limited and shall generate more business without any dependence on LIC and Government assistance or funds. Resources through strategic disinvestment of Government equity from the transaction will be used to finance developmental programmes of the Government benefiting the citizens.
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