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Synopsis :IDBI Bank's privatisation is nearing completion, with the government and LIC preparing for due diligence. The sale will reduce their combined holding to 34%. The Union Budget targets raising ?50,000 crore from disinvestments, while Hindustan Zinc and SCI sales face staggered and procedural delays. DIPAM Secretary emphasizes a value-creation strategy over fiscal deficit management.
The privatisation of IDBI Bank is progressing rapidly, with the process reaching an advanced stage. The Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey has confirmed that the government, in collaboration with the Life Insurance Corporation of India (LIC), is preparing to undertake due diligence shortly. This step follows the Reserve Bank of India (RBI) nearing completion of its assessment of potential bidders against the "fit and proper" criteria.
In January 2023, the government initiated the privatisation process by issuing an Expression of Interest (EOI). The strategic sale involves offloading a combined 61% stake, with 30.48% held by the Government of India and 30.24% by LIC. Upon completion of this sale, the combined holding of the government and LIC in IDBI Bank will reduce to 34%.
Additionally, the Union Budget for 2024-25 projects raising ?50,000 crore through a mix of asset monetisation and disinvestment, though this target may be adjusted based on the progress and outcomes of specific transactions.
Regarding other disinvestment initiatives, Pandey mentioned the government's intention to sell its minority stake in Hindustan Zinc in small tranches. The government currently holds a 29.54% stake in the company, while Vedanta owns 64.92%. This methodical approach aims to gauge market sentiment and optimise the sale process.
Several administrative challenges are delaying the disinvestment of Shipping Corporation of India (SCI). Key issues include resolving matters related to the Employees’ Provident Fund trust and changes in land titles and use by Mumbai customs. The government plans to sell a 63.75% stake in SCI once these procedural hurdles are cleared.
The government remains committed to its disinvestment strategy as outlined in the Interim Budget. This strategy prioritises value creation over fiscal deficit management. Pandey reiterated that all decisions taken by the Cabinet will be respected, although the timing and pace of disinvestments will be carefully calibrated to align with market conditions and strategic goals.
Disclaimer: The information provided is based on current developments and official statements. Financial decisions should be made based on updated and comprehensive analyses.
