Center can get a bonus for its stake in IDBI Bank

The agreement will allow the government not to have to inject more funds into the bank IDBI, which received up to 10,610 rupees last year, the highest of public sector banks. (Reuters)

The Center is expected to raise about 10,500 crores by disinvesting 40-42% of its stake in the stressed IDBI Bank at the State Life Insurance Corporation (LIC) of the state at a price of about 62 / share, at a premium to the market price, sources told FE. On Tuesday, IDBI shares closed at 52.50 rupees, down 6.25% on BSE.

The exact details of the proposed transaction, such as the price and the amount of the sale of the shares, would soon be known. September, the sources said. On Friday, the Indian Regulatory Authority and Insurance Development approved a proposal by LIC to increase its stake in IDBI Bank by 51%. LIC currently holds 10.82% in IDBI Bank while the Center holds 80.96%

The government is expecting a LIC premium for its stake in the bank, given its "future potential". Although LIC itself does a valuation of the bank, it is understood that it would consider paying the government the average share price of the last three months, which is about 62 / share. In a similar transaction last year, the Center sold its 51.11% stake in HPCL Petroleum Dealers to the Explorer Oil and Natural Gas Corporation for 36,915 crore or 36.9% of its revenue. total disinvestment. from 1 lakh crest. In defending the proposed deal involving two public sector entities, NITI Aayog Vice President, Rajiv Kumar, said: "I hope that LIC will make a very good profit after IDBI turnaround. Bank in the coming years. "

to have to inject more funds into the IDBI Bank, which had received up to 10,610 crore Rs last fiscal year, the most by any public sector bank (PSB). However, LIC must reduce its stake in the bank to the regulatory limit of 15% in a company over a period of time.

Despite the mbadive injection by the government last year, the core equity of IDBI Bank amounted to 7.42% March 31, just above the requirement minimum regulatory requirement of 7.37%. Gross nonperforming badets (NPAs) reached 27.95% and net NPAs 16.69%, the highest rate reported by all PSBs. In the budget for 2016-17, the government had stated that it could consider reducing its stake in IDBI Bank below 50%, but that it could not find buyers at the price that He wanted.

While the Center was able to pay off a huge Rs 1 Lakh Crore from the disinvestment of fiscal year 18, the goal of 80,000 crore for the current fiscal year is difficult because the pipeline is modest and the markets have become unstable. He has so far raised Rs 8,759 crore including "8.325 crore from the offer of additional funds from Bharat 22 – ETF. A new tranche of the CPSE ETF and the list of the entity resulting from the merger of three general insurers PSU, offers for sale and sale of part of Suuti's stake in Axis Bank and ITC are on which the government counts.