Strategic divestment of IDBI Bank receives CCEA nod
ECONOMY & POLICY

Strategic divestment of IDBI Bank receives CCEA nod

The long-pending strategic divestment of IDBI Bank received approval from the Cabinet Committee on Economic Affairs (CCEA) on May 5.

As per an official statement, the extent of 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 central government and LIC, jointly own over 94% of the equity of IDBI Bank, with the Centre having 45.48% equity, and LIC with 49.24%. LIC is currently the promoter of IDBI Bank with the management control system, with the Government of India as its co-promoter.

A high ranking government official has said that LIC and the Centre will separate the substantial stake after meeting with the RBI. The process of selling the major stake in the bank to a private consumer will also be decided after the meeting. A year when the government is using the term privatisation, the official statement made on CCEA clearance used the previous term strategic disinvestment. This strategic development even includes a sale to other state-owned entities.

LIC had completed the acquisition of controlling the stake in IDBI in January 2019, making IDBI the bank's majority shareholder. After this, RBI stated that IDBI stands re-categorised as a private bank.

The statement of CCEA said that LIC's Board members have passed a resolution that LIC may reduce the shareholding in IDBI bank by divesting its stake together with a strategic stake sale in the vision of the government to relinquish the management control and taking into consideration price, market outlook, statutory stipulation, and interest of the policyholders.

For the year 2021-2022, the Centre has targeted the divestment of $40 billion on the back of the privatisation of Air India, Bharat Petroleum, Shipping Corp, Concor, two state-owned banks and the initial public offerings of the LIC.

A major part of the stake was sold to LIC, but an eventual sale to a private sector has been on the cards.

Image Source


Also read: Union Cabinet clears new divestment policy

Also read: What is strategic about disinvestment?

The long-pending strategic divestment of IDBI Bank received approval from the Cabinet Committee on Economic Affairs (CCEA) on May 5. As per an official statement, the extent of 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 central government and LIC, jointly own over 94% of the equity of IDBI Bank, with the Centre having 45.48% equity, and LIC with 49.24%. LIC is currently the promoter of IDBI Bank with the management control system, with the Government of India as its co-promoter. A high ranking government official has said that LIC and the Centre will separate the substantial stake after meeting with the RBI. The process of selling the major stake in the bank to a private consumer will also be decided after the meeting. A year when the government is using the term privatisation, the official statement made on CCEA clearance used the previous term strategic disinvestment. This strategic development even includes a sale to other state-owned entities. LIC had completed the acquisition of controlling the stake in IDBI in January 2019, making IDBI the bank's majority shareholder. After this, RBI stated that IDBI stands re-categorised as a private bank. The statement of CCEA said that LIC's Board members have passed a resolution that LIC may reduce the shareholding in IDBI bank by divesting its stake together with a strategic stake sale in the vision of the government to relinquish the management control and taking into consideration price, market outlook, statutory stipulation, and interest of the policyholders. For the year 2021-2022, the Centre has targeted the divestment of $40 billion on the back of the privatisation of Air India, Bharat Petroleum, Shipping Corp, Concor, two state-owned banks and the initial public offerings of the LIC. A major part of the stake was sold to LIC, but an eventual sale to a private sector has been on the cards. Image SourceAlso read: Union Cabinet clears new divestment policyAlso read: What is strategic about disinvestment?

Next Story
Infrastructure Energy

South West Pinnacle Wins Rs 30 Cr Oman Mining Contract

South West Pinnacle Exploration Ltd has secured a Rs 30 crore contract from Minerals Development Oman (MDO) for mining exploration in concession areas 12B and 13.The two-year project will be carried out via Alara Resources LLC, a JV in Oman. MDO, backed by Oman’s investment authorities, focuses on monetising mineral wealth.The contract covers copper, gold, and chromite and highlights South West Pinnacle’s growing footprint in international exploration and mining services. ..

Next Story
Equipment

Godrej GEG Boosts Intralogistics with AI and Green Tech

Godrej Enterprises Group (GEG) is revolutionising warehouse and factory logistics through its Material Handling Equipment and Storage Solutions arms by integrating AI, IoT, and automation.With 20–25% market share and 85% local sourcing, GEG champions Atmanirbhar Bharat and sustainability. The Chennai plant, a green manufacturing leader, uses RoHS-compliant materials and has slashed energy consumption by 60%.GEG serves e-commerce, FMCG, retail, and cold chains with high-performance racking and electric forklifts. Upcoming IoT-enabled forklifts and telematics solutions aim to improve speed, sa..

Next Story
Infrastructure Urban

Amit Shah Inaugurates Key Projects Across Gujarat

Union Home Minister Amit Shah inaugurated and laid the foundation stone for various projects in Gujarat’s Panchmahal district and Ahmedabad.In Godhra, he inaugurated the Center of Excellence building, sports complex, reservoir, and Miyawaki plantation. In Ahmedabad, he unveiled a new cooperative complex in Adaroda village and a primary school in Juwal.These projects, under the Model Co-op Village scheme, aim to boost education, sustainability, and rural development across the state. ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?