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The privatization of IDBI Bank has taken a significant step forward as India’s market regulator, SEBI, approved the reclassification of the Life Insurance Corporation of India (LIC) as a public shareholder. The bank announced this development to stock exchanges, marking a crucial phase in the divestment process.
LIC’s role shifts to public investor status
LIC’s stake in IDBI Bank will now be treated like any other public investor, limiting it’s voting rights.
- SEBI approves reclassification of LIC as a public shareholder in IDBI Bank.
- LIC’s voting rights in IDBI Bank will be capped at 10%.
- LIC will not participate in IDBI Bank’s management or board.
- Government expects financial bids for IDBI Bank stake in Q3 of the current fiscal year.
Under SEBI’s regulations, this reclassification means LIC’s voting rights in IDBI Bank are now restricted to a maximum of 10% of the total voting power.The bank confirmed this in a regulatory filing,stating,”The voting rights of LIC shall not exceed 10 per cent (ten per cent) of the total net effective voting rights of the IDBI Bank.”
Furthermore, LIC will not be involved in the bank’s day-to-day management, nor will it hold any special privileges or board representation. LIC plans to detail its reclassification strategy in the letter of offer, which will be distributed to shareholders during the open offer phase initiated by the prospective new owner.
Stake reduction adn future steps
LIC is also mandated to reduce its stake in IDBI Bank to 15% within two years following the government’s completion of its strategic disinvestment.
With SEBI’s nod secured, IDBI Bank will proceed with formalizing LIC’s reclassification through the stock exchanges. This action is viewed as a pivotal milestone,ensuring the bank’s ownership structure aligns with regulatory requirements as it moves towards privatization.
The expression of interest process for selling the government’s stake in IDBI Bank has concluded, with due diligence currently underway.
As of august 21,Arunish Chawla,Secretary of the Department of Investment and Public Asset Management (DIPAM),confirmed that the initial interest process was complete. The government is anticipating the submission of financial bids for its stake sale during the third quarter of the current financial year.
What does SEBI’s approval mean for LIC and IDBI bank? SEBI’s approval allows LIC to be treated as a public shareholder, limiting its voting rights and operational involvement in IDBI Bank, a key step in the bank’s privatization.
When must LIC reduce its stake? LIC must reduce its shareholding in IDBI Bank to 15% within two years after the government’s strategic disinvestment is finalized.
What is the timeline for financial bids? Financial bids for IDBI Bank’s stake sale are expected to be invited in the third quarter of the current financial year.
What is the current status of IDBI Bank’s privatization? The expression of interest phase has ended, and due diligence is in progress, with
