IDBI Bank's Share Price Surges 7% as RBI Issues ‘fit and proper’ Report on Bidders for the Bank

Industrial Development Bank of India's (IDBI) shares surged by nearly 7 per cent on the bourses after the Reserve Bank of India (RBI) issued a 'fit and proper' report on bidders for the bank. With the report coming out, the government can now move towards the next step of the privatisation process.

IDBI Bank has been set for privatization for a while now. The government has been waiting for the central bank to check if the bidders meet the necessary standards and are not under investigation by other regulators before moving to the next stage of the process, as per a report by Times of India.

At 3:15 pm, the shares of the banking firm were trading at Rs 92.21, up by almost 5 per cent on the National Stock Exchange.

While, Life Insurance Corporation (LIC) currently holds 49.24 per cent in IDBI Bank the Centre holds a 45.48 per cent stake in the same. With RBI's nod to bidders in the 'fit and proper' report, the government will likely move on to the next stage.

The move of divestment is in continuation with the government's new public sector enterprises policy. The policy's goal is to minimize the role of government in public sector enterprises across every economic sector.

In IDBI's case, the government plans to sell 60.7 per cent of its stakes, which includes 30.5 per cent of the government and 30.2 per cent of LIC. While 95,000 crore is the current market cap, the government hopes to make almost Rs 29,000 crore from selling its stake in the banking firm.

IDBI is not the only public enterprise in line for the centre's divestment plan. The government plans to sell its stakes in public sector companies such as BPCL, Concor, BEML, and Shipping Corporation. This move is part of the government's effort to withdraw from the 'non-strategic' sector.