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RBI Clears Path for IDBI Bank Privatisation, Due Diligence to Start Soon

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Synopsis:

RBI approves privatisation of IDBI Bank, with due diligence starting in August. Government and LIC to sell 61% stake. Financial bids are anticipated by fiscal year-end. In the calendar year 2024, IDBI Bank shares have risen 53%.

IDBI Bank News Today

In a significant development for the privatisation of IDBI Bank, the Reserve Bank of India (RBI) has given its 'fit and proper' nod to the proposal. This marks a crucial step forward in the strategic sale process. As a result of this approval, IDBI Bank’s share price will remain in focus.

Bidders and Due Diligence

Sources indicate that bidders for IDBI Bank will begin due diligence in early August. They will access the virtual data room and review the draft share purchase agreement. The government is expected to call for financial bids before the end of the current financial year.

IDBI Bank Stake Sale Details

The government and the Life Insurance Corporation of India (LIC) are collectively selling approximately 61% stake in IDBI Bank. The government's share is 30.48%, while LIC holds 30.24%. The Divestment Department had already forwarded the names of prospective bidders to the central bank for evaluation.

Historical Context and Challenges

IDBI Bank's disinvestment journey has faced multiple hurdles. The first Preliminary Information Memorandum (PIM) inviting Expressions of Interest was published on October 7, 2022. However, it received a poor response, leading to a renewed attempt in November last year to appoint an asset valuer.

Market Response

Yesterday, IDBI Bank share prices initially spiked on the news but settled 0.4% lower at ₹103.79 by the end of the session. Despite this, the stock has seen a substantial rise of 53% so far in 2024.

Key Takeaways

The RBI's approval for IDBI Bank privatisation is a major step towards its strategic sale. With due diligence set to begin in August and financial bids expected by the end of the fiscal year, the government aims to complete the disinvestment process efficiently. This move is anticipated to bring significant changes to the bank's future operations and ownership structure.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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