After the news of the government stopping the disinvestment process of IDBI Bank, there was a huge fall in the bank’s shares on Monday. IDBI Bank shares fell by about 15% in the day’s trading. According to reports, the government is currently considering stopping the sale process of this bank and canceling the already received bids. It is being told that the financial bids of potential buyers have come less than the minimum price (floor price) fixed by the government. According to sources, if the government wants to continue the sale process further, it may have to start the bidding process again.
Approval was given in 2021
In May 2021, the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi had given in-principle approval for strategic disinvestment and management control transfer in IDBI Bank. After this, in 2023, the government and Life Insurance Corporation of India (LIC) had decided to sell their respective stake in IDBI Bank. Both together hold more than 94% stake in the bank. Government’s stake in this is 45.48% and LIC’s stake is 49.24%.
Which companies showed interest?
The government did not officially reveal the names of potential buyers, but according to reports, Fairfax Financial Holdings and Emirates NBD had submitted financial bids. Kotak Mahindra Bank had made it clear in February that it has not made any financial bid for the disinvestment of IDBI Bank.
How much money could the government have received?
If 30.48% stake in IDBI Bank was sold, the government could have got about Rs 30,215 crore as per Friday’s closing price. The government has been trying to reduce its stake in IDBI Bank for a long time under the privatization and asset monetization plan. This strategic sale is also being considered an important test case in the banking sector.
Disinvestment target may be affected
If the sale of IDBI Bank is completely cancelled, it may be difficult for the government to achieve the disinvestment and asset monetization target of Rs 80,000 crore for FY 2027.
Sharp fall in shares
After these news, IDBI Bank shares fell by about 15% on NSE to Rs 78.42. It came very close to its 52-week low of Rs 71.90, which was recorded in March last year.