IDBI Bank gains on RBI's 'fit and proper' report on bidders, shares up by 6% in early trade

Shares of IDBI Bank were up by nearly 6 percent in the morning trade following reports of the Reserve Bank of India issuing a ‘fit and proper’ report on its divestment process. 

According to a CNBC-Awaaz report, the RBI has submitted the report ahead of the Union Budget 2024-25. The RBI report ensures that the bidders meet the ‘fit and proper’ criteria and comply with regulations to proceed to the next stage of the privatisation process. 

Business Today was unable to verfiy the report on its own. 

The lender has been slated for privatisation for several years with the market eagerly awaiting the central bank’s assessment of the bidders.  

The Centre holds a 45.5 percent stake in IDBI Bank and LIC has over 49 percent stake. The privatisation plan involves selling 60.7 percent of the bank, including government’s 30.5 percent stake and LIC’s 30.2 percent stake. 

Bidders for IDBI Bank must have a minimum net worth of Rs 22,500 crore and have reported net profits in three of the last five years. A bidding consortium can have up to four members, and the successful bidder must lock in at least 40 percent of the equity capital for five years. 

IDBI Bank reported a standalone profit after tax (PAT) of Rs 1,628.46 crore, 44 percent higher compared to the corresponding quarter of the previous financial year. 

Its net interest income (NII) rose by 12 percent to Rs 3,688 crore vs Rs 3,280 crore on a YoY basis while return on assets (RoA) improved by 39 bps to 1.82 percent for Q4 compared to 1.43 percent for in Q4 of the corresponding quarter of the previous financial year. 

IDBI Bank’s gross NPA ratio improved to 4.53 percent as against 6.38 percent YoY while net NPA ratio also improved to 0.34 percent vs 0.92 percent YoY. Total deposits increased to Rs 2,77,657 crore as on March 31, 2024, as against Rs 2,55,490 crore as on March 31, 2023. CASA increased to Rs 1,40,027 crore and CASA ratio stood at 50.43 percent.