Shares of IDBI Bank soared nearly 6 percent to Rs 93 per share on July 18 after the Reserve Bank of India (RBI) issued a 'fit and proper' report on bidders, advancing the divestment process.
The bank has been slated for privatization for several years, with market watchers eagerly awaiting the central bank's assessment of the bidders. The RBI's evaluation ensures that the bidders meet the 'fit and proper' criteria, complying with regulations to proceed to the next stage of the privatization process.
The central government holds a 45.5 percent stake in IDBI Bank, with LIC as the largest shareholder at over 49 percent. The plan involves selling 60.7 percent of the bank, including the government's 30.5 percent stake and LIC's 30.2 percent stake.
Following the RBI's completion of the vetting process, the government will grant qualified bidders access to confidential IDBI Bank data, including employee pension funds and insurance or medical coverage details.
To qualify, bidders for IDBI Bank must have a minimum net worth of Rs 22,500 crore and have reported net profits in three of the last five years. A bidding consortium can have up to four members, and the successful bidder must lock in at least 40 percent of the equity capital for five years.
In its Q1FY25 business update, IDBI Bank reported a 13 percent year-on-year (YoY) increase in total deposits to Rs 2.7 lakh crore, up from Rs 2.4 lakh crore in the same period last year. Net advances also rose by 17 percent YoY to Rs 1.9 lakh crore in Q1FY25 from Rs 1.65 lakh crore in Q1FY24.
So far this year, the stock of this state-owned lender has surged over 33 percent, as compared to benchmark Nifty 50's 12 percent rise. Earlier, IDBI Bank had reached a 52-week high of Rs 98 per share on February 6, 2024.
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