New Delhi: The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has given its in-principle approval for the strategic disinvestment along with the transfer of management control in IDBI Bank Ltd. The extent of the respective shareholding to be divested by the government and Life Insurance Corporation (LIC) shall be decided at the time of structuring of transaction in consultation with the Reserve Bank of India (RBI).
The government of India (GoI) and LIC together own more than 94 percent of the equity in IDBI Bank (GoI 45.48%, LIC 49.24%). LIC is currently the promoter of IDBI Bank with management control and the government is the co-promoter.
LIC's Board has passed a resolution to the effect that LIC may reduce its shareholding in IDBI Bank Ltd. 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 policyholders. This decision of the LIC 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 Ltd and shall generate more business without any dependence on LIC and government assistance and funds. Resources through strategic disinvestment of government equity from the transaction would be used to finance developmental programmes of the government, benefiting the citizens.