Control of IDBI Bank will be transferred soon. The Cabinet Committee on Economic Affairs headed by Prime Minister Narendra Modi has given in-principle approval for the strategic disinvestment of the bank. With this, the management control of the bank will also be transferred.
The bank's stock was up 8% on Wednesday morning. However, it closed at Rs 37.95, up 4.40% at the close of the market.
In a statement, both the government and LIC will sell the stake, the government said that both the government and LIC have agreed that the matter will be discussed with the Reserve Bank in connection with the transaction, and also the time will be decided. The Reserve Bank is therefore the banking regulator in this case. LIC is because it holds the majority holding of the bank.
The LIC board had already approved the approval of the LIC board to sell the stake in the bank. There was also talk of management control in this. Both the government and LIC hold more than 94% stake in the bank. The government holds 45.48% and LIC holds 49.24%. LIC is currently the promoter of this bank. Also, management control is also with him.
According to the resolution passed by the LIC Board, the LIC board will reduce its share, as well as the government, can also reduce its share in the strategic sale. All this will be done keeping in mind the interests of the policyholders and the outlook of the market and other matters.
It is anticipated that whoever will be the strategic buyer will infuse the money into the bank. Will spend on new technology and will also decide the best management.
Last month, the bank came out of PCA.
Last month, the Reserve Bank dropped IDBI Bank out of PCA. PCA means the bank is put into it if it does not meet the huge losses, huge NPAs and other conditions. That is, after going to PCA, the bank will neither be able to open a new branch nor will it be able to give a new loan. The bank went under PCA in May 2017.
The proposal came in the budget on February 1, in the budget on February 1, Finance Minister Nirmala Sitharaman said that along with IDBI Bank, she proposes to make two public sector banks private. IDBI Bank made a profit of Rs 512 crore for the quarter ended March. A year ago this benefit was Rs 135 crores.
However, after five years, the bank made a profit on an annual basis for the first time which was in the year ended in March this year. It earned a profit of Rs 1,359 crore this year. The bank had a loss of Rs 12,887 crore in March 2020.