Finance Minister Arun Jaitley had earlier indicated a change in the characteristics of IDBI Bank.
With IDBI Bank's proposed Qualified Institutional Placement (QIP) issue receiving lukewarm interest from investors, government is now considering other options including follow on public offer and strategic sale to reduce its stake in the lender.
"We have never said that QIP is the only route. Initially some investors had shown their interest in QIP, but right now there is not much interest," Finance Ministry sources said. They added that the government is looking at options like follow on public offer and strategic sale. Some global lenders, including IFC, had concluded due diligence ahead of the proposed QIP but nothing materialised, sources added.
As per norms, there is requirement of minimum five investors for a QIP issue. The government in December gave approval to IDBI Bank for raising Rs 3,771 crore during the year by way of QIP to dilute its holding by about 26 per cent. The government's holding in the bank stands at 73.98 per cent. As per existing norms, the government equity in a public sector bank cannot go below 52 per cent to maintain the character of a state-owned bank.
Finance Minister Arun Jaitley had last year indicated a change in the characteristics of IDBI Bank wherein government would have a majority stake, but at the same time maintain an arm's-length distance.
Citing the example of Axis Bank, he had wondered if IDBI Bank can follow that model. The government indirectly controls 29.19 per cent in Axis Bank through the administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), the Life Insurance Corp and four other public sector general insurance companies.
IDBI Bank came into existence with Parliament passing the IDBI Repeal Act in 2003. In terms of provisions of the Act, IDBI has been functioning as a bank in addition to its earlier role of a financial institution.Last week, the Finance Minister said the proposal of stake dilution in IDBI Bank is still under consideration. "The issue is still under the consideration of the government. The decision of the government stands," he said.
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