IDBI Bank: The government has taken a step forward in the process of selling its stake of $7.1 billion in IDBI Bank Limited, which is equal to 60.72 percent. Now arrangements can be made to bid for it soon. This is an important step in the long-running efforts to privatize this already troubled bank and accelerate divestment efforts.
According to people with knowledge of the matter, talks with potential buyers for this are at an advanced stage. It is also being told that the bidding process can be started from this month itself. If everything goes well then privatization of a government bank will happen after decades.
The condition of the bank has improved in recent years
The government aims to sell its 60.72 percent stake in this Mumbai-based bank, which is approximately $ 7.1 billion as per the current market price of IDBI Bank. Burdened with heavy debt, this bank has emerged from cleanup in recent years. The bank returned to profit after capital support and a rapid recovery helped it sharply cut non-performing assets.
When will privatization happen?
Since the bank is profitable today, the outstanding loans are being repaid and the condition of the balance sheet has also improved, the government is now ready to hand it over to private hands, but due to many other problems like delay in getting regulatory approval, the government missed the previous deadline to complete the sale. The government says that privatization will be completed by March 2026.
Who is involved in the bidding race?
The shortlisted bidders are currently carrying out due diligence i.e. examining the bank closely. Kotak Mahindra Bank Limited, Emirates NBD PJSC and Fairfax Financial Holdings Limited had shown interest in buying the bank. The Central Government and the government company Life Insurance Corp of India together have about 95 percent stake in IDBI Bank. The government will sell its 30.48 percent stake in the bank, while LIC will sell 30.24 percent stake with the transfer of management control.
What will be the impact on customers?
After the sale of the bank, its move towards privatization will undoubtedly bring some changes, but it will not affect the bank account holders. Bank account, loan amount, everything will remain the same as before, but after privatization, customers can get better facilities. Some minor changes may have to be made such as the login ID may change or there may be changes in the check book or pass book. Its effect can also be seen on bank shares in the coming time.
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