Three potential suitors for IDBI Bank stake sale secured ‘Fit & Proper’ certificate from RBI: Report

Three potential suitors for IDBI Bank have secured ‘Fit & Proper’ certificates from the Reserve Bank of India (RBI) paving the way for their possible acquisition of the bank, CNBC-TV18 reported. The candidates include Fairfax Financial, Emirates NBD, and Kotak Mahindra Bank, the report said quoting sources. 

Last month, the Secretary of Department of Investment and Public Asset Management (DIPAM) had said that the privatisation of IDBI Bank is at a very advanced stage and the government will soon move to the next step of the exercise and undertake due diligence soon.  

“IDBI Bank transaction is at a very advanced stage. We will move to the new stage of due diligence in anytime,” said Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM). The Reserve Bank of India is likely to complete assessment of potential bidders on “fit and proper” criteria soon, he told Business Today.  

The Centre and the Life Insurance Corporation of India (LIC) will be offloading 61 percent stake in the bank, which comprises of 30.48 percent stake of the Government of India and 30.24 percent of LIC. The process of the lender’s privatisation had begun in January 2023 when the Centre had issued an Expression of Interest and it is expected to be completed this fiscal.  

Kotak Mahindra Bank might not pursue the acquisition of IDBI Bank at this time, the CNBC-TV18 report added. 

The Union Budget 2024-25 has estimated raising Rs 50,000 crore from “miscellaneous capital receipts”, which will be a mix of asset monetisation and disinvestment, Pandey said, but indicated that the target may be reviewed based on the strategy and actual transactions that take place.  

The lender posted a profit of Rs 1,719.27, higher by 40.4 percent compared to Rs 1,224.18 reported in the same period of last financial year. The lender’s gross non-performing assets (GNPA) improved 118 bps YoY to 3.87 percent, while the net NPA stood at 0.23 percent, recording a drop of 21 bps, according to the company statement.