IDBI Bank Privatisation to be Relaunched

The Centre is expected to restart the privatisation of IDBI Bank, following the cancellation of the process last week due to financial bids falling short of the reserve price. A ministerial panel overseeing the disinvestment is set to be briefed soon, with early indications suggesting the government is inclined to relaunch the exercise.

Key Aspects of the Relaunch

• The reserve price determination process will be reviewed, with concerns raised over the heavy reliance on the bank's stock price, particularly given its limited public float.
• The government holds a 45.48% stake in IDBI Bank, while Life Insurance Corporation of India owns 49.24%, with the remaining shares held by the public.
• Existing bidders, including Fairfax Financial led by Prem Watsa, and Emirates NBD, may not need to seek regulatory clearances again if they choose to reapply, potentially avoiding delays.

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Market Impact and Regulatory Requirements

• The bank's stock has declined about 19% since the bids were scrapped, closing at Rs 74.28 on the NSE, near its 52-week low.
• The eventual winning bidder will still need to meet the Reserve Bank of India's 'fit and proper' criteria, secure approvals from regulators including the Competition Commission of India, and make an open offer to minority shareholders.

Timeline and Next Steps

• The ministerial panel is expected to take a final decision on restarting the privatisation process soon.
• All new bids will be evaluated under the prescribed guidelines, with no plans to merge IDBI Bank with any other state-run lender.

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