The Government has planned to invite expression of interest from investors to sell its stake in IDBI Bank. As per an official, the Government may sell around 26% stake in the bank. To make it lucrative, the Government also intends to give away some management control.
“We have been working on the proposal for a while now and most of the details have been finalized. We expect to invite the expression of interest from investors by end of next month or May,” the official said.
IDBI Bank is a private sector bank and is a subsidiary of the Life Insurance Corporation of India. Although, this is a part of the disinvestment plan of the Government of India, however, LIC chairman has insinuated to continue to have some stake in the bank in order to continue to reap benefits of the bancassurance channel.
“Going forward, we would like to have some stake in IDBI Bank. The whole idea of us picking up stake in the bank was strategic in nature and that has not gone away at all,” LIC Chairman MR Kumar had said last month.
Bancassurance is an arrangement between the bank and an insurance company under which the insurance company utilizes the branch network to sell its products to the customers of the bank.
“I, as LIC Chairperson, would like to see the relationship continuing in the future as well,” he had said.
Industrial Development Bank of India was established under the Industrial Development Bank of India Act 1964 as a Development Financial Institution. It stayed a DFI until it was transformed into a Bank in 2004.
Recently in 2019, the Bank was categorized as a ‘Private Sector Bank’ for regulatory purposes by the Reserve Bank of India (RBI). Thereafter, the Life Insurance Corporation of India acquired 51% of the total paid-up equity share capital of the bank.