IDBI Bank disinvestment faces delays amid RBI scrutiny

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IDBI Bank disinvestment faces delays amid RBI scrutiny
Credit: © Reuters.

NEW DELHI - The Indian government's plan to divest its stake in IDBI Bank (NS: IDBI ) has encountered delays this fiscal year, according to DIPAM Secretary Tuhin Kanta Pandey. The sale process is being held up due to an ongoing examination by the Reserve Bank of India (RBI) and stringent financial criteria that must be met alongside a detailed due diligence process.

The government, along with the Life Insurance Corporation (NS: LIFI ) of India (LIC), collectively holds a 61% stake in IDBI Bank. LIC has recently started the process of bidding by asset valuers, which is a step towards the eventual disinvestment. However, this meticulous approach suggests that the government is keen on ensuring a thorough and transparent disinvestment process.

Pandey emphasized the importance of a comprehensive disinvestment strategy that not only focuses on the sale of assets but also takes into account the accumulated dividends from these transactions. He noted that dividends received from central public sector enterprises have contributed significantly to government revenues, with a total of ₹16,257 crore amassed in FY24.

The disinvestment of IDBI Bank is a part of the government's broader agenda to reduce its footprint in non-strategic sectors, aiming to streamline its operations and raise funds. The delay indicates the complexity and regulatory challenges inherent in such large-scale disinvestments, especially in the banking sector which is heavily regulated. As the government navigates through these challenges, investors and market watchers are closely monitoring developments for any signs of progress.

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