Centre looking to offload its stake in IDBI Bank in FY21: Govt official

The Centre is looking to offload its stake in IDBI Bank in FY21, notwithstanding the tough market conditions due to the Covid-19 pandemic, a top government official said on Saturday.

“We are planning to exit our stake in IDBI Bank this year itself. It already has cabinet approval,” the official said.

In her Union Budget 2020-21 speech, Finance Minister Nirmala Sitharaman had said that the government would sell its entire stake in IDBI Bank to private players. The government, a promoter, holds around 46.5 per cent stake in IDBI Bank, while LIC owns 51 per cent.

The official, in an interaction with journalists, also spoke on upcoming new Privatisation Policy and whether banking will be designated a private sector. “If any sector is classified as a strategic sector, the long-term aim is to only have four state-owned entities in that sector. So if I have eight companies in a sector, I will try to merge the ones which can be merged. The ones for which merger does not make sense will be privatized,” the person said.

Sitharaman had announced the new privatization policy on May 17. “In the notified strategic sectors, it would be only one to four public sector enterprises. They will be merged or brought together, so there won’t be mushrooming of public sector,” she had said, while adding that private sector could come in strategic sector.

The upcoming policy, which will soon be up for cabinet approval, will not affect existing privatisation plans, including that of IDBI Bank.

Out of the ambitious Rs 2.1 trillion divestment target for FY21, Rs 90,000 crore is expected to come from ‘disinvestment of government stake in public sector banks and financial institutions’. This includes the planned initial public offering of LIC as well as stake sale of IDBI Bank