Government mulls LIC participation in IDBI Bank disinvestment

The Narendra Modi government is considering offloading some of the LIC stakes in IDBI bank as part of its divestment process, according to people in the know. However, no decision has been taken and the matter came up during consultations on the government’s aim to exit from IDBI Bank. Sources indicate that any such decision will be guided by valuations.

The issue probably is also of the limited public float of IDBI Bank, with the government holding close to 47 percent and LIC shareholding at 51 percent in the bank. The probability of LIC riding piggyback on a government offer could help matters.

The government is still deciding whether it will sell its equity in IDBI Bank in tranches and the quantum, therefore, or as a single offer for sale.

Finance minister Sitharaman said in the budget, “… it is proposed to sell the balance holding of Government of India IDBI Bank to private, retail and institutional investors through the stock exchange”.

The Insurance regulator IRDA has set a 12-year timeframe for LIC to exit from IDBI Bank but there is no bar on the Corporation to exit the bank before this period.

Source: CNBC Tv18