Shares of IDBI Bank soared nearly 7 per cent to Rs 94 per share on July 18 after the Reserve Bank of India (RBI) issued a ‘fit and proper’ report on bidders, advancing the divestment process.
IDBI Bank has been up for privatisation for several years, and the govt had been awaiting an RBI’s assessment on bidders meeting the “fit and proper” norms — or are compliant with regulations and are not under the scanner of other regulators — to move to the next stage of the process.
The central government holds a 45.5 per cent stake in IDBI Bank, with LIC as the largest shareholder at over 49 per cent. The plan involves selling 60.7 per cent of the bank, including the government’s 30.5 per cent stake and LIC’s 30.2 per cent stake.
Following the RBI’s completion of the vetting process, the government will grant qualified bidders access to confidential IDBI Bank data, including employee pension funds and insurance or medical coverage details.
To qualify, bidders for IDBI Bank must have a minimum net worth of Rs 22,500 crore and have reported net profits in three of the last five years. A bidding consortium can have up to four members, and the successful bidder must lock in at least 40 per cent of the equity capital for five years.
In its Q1FY25 business update, IDBI Bank reported a 13 per cent year-on-year (YoY) increase in total deposits to Rs 2.7 lakh crore, up from Rs 2.4 lakh crore in the same period last year. Net advances also rose by 17 per cent YoY to Rs 1.9 lakh crore in Q1FY25 from Rs 1.65 lakh crore in Q1FY24.
So far this year, the stock of this state-owned lender has surged over 33 per cent, as compared to benchmark Nifty 50’s 12 per cent rise. Earlier, IDBI Bank had reached 52-week high of Rs 98 per share on February 6, 2024.
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