Life Insurance Corporation of India (LIC) is currently the promoter of IDBI Bank with management control and Government of India (GoI) is the co-promoter.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has given its in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank.
GoI and LIC together own more than 94% of equity of IDBI Bank (GoI 45.48%, LIC 49.24%). The extent of respective shareholding to be divested by GoI and LIC will be decided at the time of structuring of transaction in consultation with the Reserve Bank of India (RBI).
LIC's board has passed a resolution to the effect that LIC may reduce its shareholding in IDBI Bank through divesting its stake along with strategic stake sale envisaged by the Govt. with an intent to relinquish management control and by taking into consideration price, market outlook, statutory stipulation and interest of policy holders.
This decision of LIC board is also consistent with the regulatory mandate to it to reduce its stake in the bank.
"It is expected that strategic buyer will infuse funds, new technology and best management practices for optimal development of business potential and growth of IDBI Bank and shall generate more business without any dependence on LIC and Government assistance/funds. Resources through strategic disinvestment of Govt. equity from the transaction would be used to finance developmental programmes of the Government benefiting the citizens," CCEA said in a statement.
IDBI Bank offers a wide range of products from savings and current bank account to loans for retail and MSME customers or agri-loans to farmers.
The bank reported a net profit of Rs 512 crore in Q4 FY21, up 278% compared with net profit of Rs 135 crore in Q4 FY20. Total income during the quarter increased by 0.5% year-on-year (YoY) to Rs 6,962.59 crore.
Shares of IDBI Bank jumped 4.40% to end at Rs 37.95 on the BSE.
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