IDBI Bank divestment will set tone for PSB privatisation

The Union government said it had received multiple Expressions of Interest (EOI) for the strategic disinvestment of stake held by it and the Life Insurance Corporation of India (LIC) in IDBI Bank. State-owned LIC (49.2 percent) and the government (45.5 percent) are the largest shareholders in the bank.

Moneycontrol had reported on Sunday that Emirates NBD and the billionaire Prem Watsa-led Fairfax Group of Canada are likely to have submitted EOIs. This means that there is some progress on IDBI Bank’s privatisation nearly half a decade after the idea was debated.

Along with this, permission from the Securities and Exchange Board of India (Sebi) to reclassify the government shareholding in IDBI Bank as ‘public’ after the stake sale, and the government’s decision allowing foreign funds and investment entities to own more than 51 percent of the bank, has made the whole plan a workable idea.

To be sure, the process still has a long way to go since the Reserve Bank of India (RBI) needs to clear the names of the potential suitors based on the criteria for parties promoting banks.

Among the rumoured bidders, the name of Watsa’s Fairfax Group has been doing rounds for a while. Watsa, whose company also controls CSB Bank, is keen to see if there is any synergy between the Kerala-based lender and IDBI Bank, and whether the two can be combined later, according to a report.