A clarification has been sought by interested bidders on whether IDBI Bank would be covered under the purview of the Central Vigilance Commission. The government had made invitation for expressions of interest (EoI) for a stake sale, along with the transfer of management control in IDBI Bank, during October
The government in a clarification said that IDBI Bank will not be subject to the requirements applicable to a state-run company followed by its proposed stake sale.
Also, an application has been made for its shareholding in the lender to be reclassified as ‘public’, said IDBI responding to pre-expression of interest (EoI) queries.
A clarification has been sought by interested bidders on whether IDBI Bank would be covered under the purview of the Central Vigilance Commission. Also, will it be required to comply with the requirements under the reservation policies of the government.
The government had made invitation for expressions of interest (EoI) for a stake sale, along with the transfer of management control in IDBI Bank, during October. The government and the Life Insurance Corporation (LIC) will sell 60.72 per cent stake in the lender.
A clarification issued by the Department of Investment and Public Asset Management (DIPAM), said, “Bidders are informed that the GOI has already made an application for reclassification of its shareholding as ‘public’. Further, the details regarding such aspects will be provided in the definitive documents (including the share purchase agreement or SPA) shared with the QIPs (qualified institutional placements) at the RFP stage.”
It said that it would be required the successful bidder to make an open offer for the acquisition of 5.28 per cent of the public shareholding. Presently, the government holds a stake of 45.48 per cent in the lender, whereas LIC holds a stake of 49.24 per cent. The last date for submission of EoI is 16 December.
According to the department there will be no compulsion on the government or the LIC to introduce capital into IDBI Bank, after the transaction. Also, it said that IDBI Bank is currently not required to be audited by the Comptroller and Auditor General.
Responding to pre-EoI queries, on whether the acquirer will hold right to reconstitute the board of directors of IDBI Bank at its discretion, the DIPAM said, that the definitive documents along with the SPA (share purchase agreement) will contain detailed terms and conditions relating to reconstitution of the board.
The department said, in response to a query on “asset stripping” by the acquirer, that the definitive documents along with SPA will have detailed terms and conditions.
The government in a clarification said that after the transaction the shareholders’, existing Reserve Bank of India guidelines will govern the voting rights. Also, LIC and the government are not persons acting in concert, and therefore their voting rights are not cumulative, it added.