The apex bank has already barred ICICI Bank and UTI Bank from privately placing their equity. It is highly unlikely that the IDBI bank will be allowed to do so, an RBI source told Business Standard.
The IDBI is planning to privately place 100 shares of the banks with each of its 3.7 lakh-odd shareholders at par, subject to the approvals of the RBI and Securities & Exchange Board of India.
While the shareholders were upset with the price of the IDBI scrip hovering below Rs 130, the offer price, and demanded a bonus issue to protect their interest, the IDBI board passed a resolution recommending private placement of the bank's share with the institution's existing shareholders.
With the RBI decision not to allow the new banks to privately place their equity shares, IDBI Bank will be left with no choice but to go for the public issue. Following the Securities & Exchange Board of India rule, the banks can make firm allotments to the shareholders of the promoters' company, other banks and financial institutions, mutual funds, non-resident Indians, foreign institutional investors and overseas corporate bodies at the time of the public issue.
There is a basic difference between the IDBI proposal and that of other new banks. While IDBI wants to appease its shareholders by privately placing the bank's shares with them, the other banks wanted to take the private placement route to raise resources.
However, the rule will be same for all banks, the Reserve Bank of Inda source clarified.
The apex bank did not cite any reason at the time of rejecting the ICICI and UTI banks' proposals.
Presumably, the reason behind not allowing the new banks to privately place their shares is to ensure that no corporate house or individual can corner the management control of the banks in league with promoters. The promoters' equity should be diluted to 40 per cent only through public issues and not private placement, sources said.
If huge chunks of equity is privately placed with a particular corporate house or the promoters' group companies, the very purpose of financial sector reforms gets defeated.
The holding can only be broad-based when the public picks up the equity from the primary market, added the sources. The entry into the market is also obligatory to make the listing of the scrip possible.
Barring the Global Trust, HDFC and Bank of Punjab, which entered the capital market even before starting operations, none of the new generation banks has yet entered the market.
IndusInd was the first bank to raise Rs 100 crore through private placement of shares last year.
The apex bank has allowed the new banks to defer their public issue by one year
