Mumbai: In an important step towards the privatisation of IDBI Bank, the Securities and Exchange Board of India (SEBI) has approved the reclassification of the Life Insurance Corporation of India (LIC) as a public shareholder, the bank informed stock exchanges.
This means LIC will now be treated like any other public investor in IDBI Bank. As per SEBI’s rules, LIC’s voting rights in the bank will be limited to 10 per cent of the total voting power.
“The voting rights of LIC shall not exceed 10 per cent (ten per cent) of the total net effective voting rights of the IDBI Bank,” the company said in its regulatory filing.
The insurer will also not take part in the bank’s management, will not have any special rights, and will not be represented on the board of directors.
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LIC, which still holds a significant stake in the bank, will outline its plan for reclassification in the letter of offer that will be shared with shareholders during the open offer process by the new buyer.
The insurer is also required to bring down its stake to 15 per cent within two years from the completion of the government’s strategic disinvestment in IDBI Bank.
Following SEBI’s approval, the bank will now approach stock exchanges to formally complete LIC’s reclassification.
The move is being seen as a major milestone in IDBI Bank’s privatisation process, as it brings the lender’s ownership structure in line with regulatory requirements.
On August 21, Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla told NDTV Profit that the expression of interest process for IDBI Bank’s stake sale has been completed, and due diligence is in progress.
The government is likely to invite financial bids for the stake sale in the third quarter of the current financial year.
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