The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi on Wednesday approved strategic disinvestment along with transfer of management control in IDBI Bank. Government of India and LIC together own more than 94 per cent stake in IDBI Bank (Government of India owns 45.48 per cent and LIC 49.24 per cent). LIC is currently the promoter of IDBI Bank with management control and central government is the co-promoter.
Meanwhile, the extent of stake to be divested by government and LIC will be decided at the time of structuring of transaction in consultation with RBI, Union Government said in a press release.
LIC's Board also passed a resolution to the effect that LIC may reduce its shareholding in IDBI Bank through divesting its stake along with strategic stake sale envisaged by the government with an intent to relinquish management control and by taking into consideration price, market outlook, statutory stipulation and interest of policy holders, Cabinet Committee on Economic Affairs said in a statement.
Life Insurance Corporation of India's board had in 2018 approved acquisition of up to 51 per cent stake in IDBI Bank thereby helping the then debt-ridden state-owned bank get a capital support of Rs 10,000 crore- Rs 13,000 crore.
Earlier this week, IDBI Bank's net profit more than tripled to Rs 512 crore compared with Rs 135.39 crore during the same period last year. Massive jump in IDBI Bank's profit came on account of negative provisions worth Rs 1,119.65 crore for non-performing assets and improvement in operating profit, majorly driven by increase in non-interest income, the bank said in an investor presentation.
IDBI Bank shares ended 4.4 per cent higher at Rs 38 ahead of government's announcement of strategic stake sale in the bank.