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IDBI Bank Disinvestment to Continue: FM Nirmala Sitharaman Confirms

Finance Minister Nirmala Sitharaman confirmed the government will continue the IDBI Bank disinvestment process despite earlier bids falling below the reserve price. The government planned to sell 30.48% stake while LIC would divest 30.24%, totaling 60.72% stake valued at Rs 72,000 crore. Sitharaman also stated there are no current plans for public sector bank consolidation, with a high-level committee to examine the matter. She emphasized that India's economic growth must be rooted in domestic activity and agriculture, citing strong internal consumption as a key driver.

Key Points: IDBI Bank Disinvestment Continues: FM Nirmala Sitharaman

  • Government to continue IDBI Bank disinvestment process
  • Earlier bids fell below reserve price
  • Total 60.72% stake on offer (30.48% govt + 30.24% LIC)
  • No current PSB consolidation plan
  • Economic growth rooted in domestic activity, agriculture
2 min read

Disinvestment process of IDBI Bank to continue: FM Nirmala Sitharaman

FM Nirmala Sitharaman confirms IDBI Bank disinvestment will continue despite earlier bids falling below reserve price. No plans for PSB consolidation yet.

"Domestic consumption and the domestic economic wheels moving well have really stood by us. - Nirmala Sitharaman"

Pune, April 24

Finance Minister Nirmala Sitharaman on Friday confirmed that the government plans to continue with the disinvestment process of IDBI Bank.

The comments dispelled the uncertainty hanging over the privatisation of IDBI Bank, as the offers received in the earlier bidding round were below the reserve price fixed by the government. Consequently, the proposed transaction had to be called off last month.

Under the original plan, the government was to sell a 30.48 per cent stake in IDBI Bank, while LIC was to divest 30.24 per cent, taking the total stake on offer to 60.72 per cent. Based on earlier market prices, the combined value was estimated at Rs 72,000 crore.

The privatisation process has been underway since January 7, 2023, when the Department of Investment and Public Asset Management received multiple expressions of interest from bidders.

The Finance Minister further stated that there is nothing on the table at present on consolidation among public sector banks, adding that a high-level banking committee will examine the matter. Sitharaman spoke to reporters on the sidelines of the inauguration of the new premises of the State Bank of India's Local Head Office, Maharashtra Circle, at Pune.

Sitharaman also highlighted that India's economic growth must be rooted in domestic activity, especially agriculture, which can also supply external markets.

She said that the sheer size of the Indian economy and strong internal consumption create the need for large banks. This domestic demand itself is capable of sustaining growth, which continues to be among the fastest in the world.

"I reiterate, the domestic consumption and the domestic economic wheels moving well have really stood by us. Even during times when global markets are in a churn, our exports are taking a beating. But our exporters, to their credit, I must say, have done well despite all the tariff and other challenges which the global uncertainties are giving them. They are because of their ingenuity, finding newer markets and performing. Exports are doing all right because they are able to find newer markets and keep their growth sustained," she added.

- IANS

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Reader Comments

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Priya S
Honestly, I'm a bit skeptical. The earlier bids were below reserve price, which shows the market isn't too excited. PSU banks have their challenges but they also serve rural and semi-urban areas that private banks often ignore. Hope the disinvestment doesn't compromise financial inclusion goals. Also, LIC selling its stake at a loss? That needs more transparency.
A
Aditya G
FM's emphasis on agriculture-led growth is spot on! With global uncertainties, our farmers and rural economy can be our backbone. But we need better credit access for small farmers - that's where banks like IDBI could play a role even after privatisation. Hope the new buyer has a vision for inclusive growth, not just profit.
D
Deepak U
The Rs 72,000 crore valuation seems ambitious given IDBI's asset quality issues. Government should focus on cleaning up the balance sheet first before selling. Also, no clarity on employee interests - thousands of jobs at stake. Privatisation should be done carefully, not hurriedly. Hope the high-level banking committee addresses these concerns.
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Rohit L
PSU bank consolidation? About time! India has too many public sector banks with overlapping operations. One or two strong nationalised banks can compete globally. But the high-level committee must ensure no branch closures in rural areas. Digital banking is fine, but crores still depend on physical branches. Balance is key! 👍
J
James A
Interesting to see the Indian government persisting with bank privatisation despite the initial setback. The scale of India's domestic market is indeed a huge advantage - 1.4 billion consumers is a strong foundation. However, global investors might be cautious given the regulatory environment.

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