Cabinet approves strategic disinvestment and transfer of management control in IDBI Bank Limited
The extent of shareholding to be divested by GoI and LIC will be decided in consultation with the RBI during the time of structuring of the transaction.
The Cabinet Committee on Economic Affairs on May 5, 2021 gave its approval for the strategic disinvestment and transfer of management control in IDBI Bank Ltd. The cabinet was chaired by Narendra Modi.
The extent of disinvestment of shareholding by the government and LIC will be decided in consultation with the RBI during the time of structuring of the transaction.
•The Life Insurance Corporation of India (LIC) and the Government of India together own more than 94 percent of the equity of IDBI Bank. While the government owns 45.48 percent, LIC owns 49.2 percent of equity.
•LIC is the promoter of IDBI Bank with Management Control and the government of India is the co-promoter.
•LIC Board recently passed a resolution that stated that LIC may reduce its shareholding in IDBI Bank Ltd.
•The company plans to divest its stake along with a strategic stake sale envisaged by the Govt.
The main aim is to relinquish management control taking into consideration market outlook, price, statutory stipulation and interest of policyholders.
The decision is consistent with the regulatory mandate to it to reduce its stake in the Bank.
•The strategic disinvestment is expected to infuse funds, new technology and best management practices that will enable the optimal development of business potential and growth of IDBI Bank Ltd.
•The move is also expected to generate more business for the bank without any dependence on LIC and or Government assistance.
•The resources through strategic disinvestment of the Government's share in the bank will be utilised for finance developmental programmes of the Government benefiting the citizens.