The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi gave approval for strategic disinvestment and transfer of management control in Industrial Development Bank of India (IDBI Bank).
- More than 94 percent of the equity of IDBI Bank was owned by the Government of India (GoI) and Life Insurance Corporation(LIC) of which GoI holds 45.48 percent and LIC holds 49.24 percent.
- Currently, IDBI Bank has LIC as its Management Controller and promoter of the bank with GoI as the co-promoter.
Background:
i.In March 2021, Reserve Bank of India(RBI) removed the LIC-controlled IDBI bank from its prompt corrective action (PCA) framework which was imposed in May 2017. Click here to know more
ii.In Union Budget FY22, Finance Minister Nirmala Sitharaman stated the privatisation of IDBI Bank along with two other state-run banks in FY22 with a disinvestment target of Rs 1.75 lakh crore.
Points to be noted:
i.After disinvestment IDBI Bank shall generate more business without any dependence on LIC and Government assistance/funds and the capital infusion is also expected from strategic buyers.
ii.The shareholding to be divested by GoI and LIC will be decided at the time of structuring of the transaction in consultation with the RBI.
About IDBI Bank’s Growth:
i.In FY21, the IDBI bank turned profitable on an annual basis (after five years) it reported a standalone profit of ₹1,359 crores against a loss of ₹12,887 crores in FY20.
ii.It reported a net profit of Rs 547.93 crore for Q3FY21 as against Rs 165.69 crore in Q3FY2O.
iii.It reported a four-fold standalone profit after tax to Rs 512 crore in Q3FY21 compared to Rs 135 crore in Q3FY2O shows a 38% growth in its net interest income (NII).
Recent Related News:
On January 27, 2021, The Cabinet Committee on Economic Affairs (CCEA) gave in-principle approval for 100% strategic divestment of the Indian Government’s shareholding in Rashtriya Ispat Nigam Limited (RINL). In addition to this it also gave approval for management control of RINL by way of privatization.
About Industrial Development Bank of India (IDBI):
Establishment – 1964
Headquarter – Mumbai, Maharashtra
Chairman– MR Kumar
MD & CEO– Rakesh Sharma
Tagline – Bank Aisa Dost Jaisa
