Credible investor to get board seat in IDBI bank makeover
NEW DELHI: The government is ready to give a strategic role and a board seat to a credible investor in IDBI Bank under a proposed transformation programme that was kick-started last week.
The government has approved the bank’s proposal to raise Rs 3,771 crore through a qualified institutional placement (QIP), which at current market capitalisation, translates into a more than 20% stake to new investors. ET had earlier reported that International Finance Corporation, the World Bank’s private investment arm, was keen to pick up a stake in the bank, which the government is keen to change like Axis Bank. “This (QIP) begins the transformation of IDBI Bank,” minister of state for finance Jayant Sinha said, flagging the ‘Indradhanush’ programme to revamp public sector banks.
After a recent infusion of over Rs 2,200 crore as capital, the government owns over 80% stake in IDBI Bank, which is struggling with rising non-performing loans.
The bank posted a net profit of Rs 120 crore in the second quarter of this financial year, little changed from Rs 118 crore a year earlier. The level of gross NPAs widened to 6.92% from 5.72%. The government hopes to attract strategic investors capable of making IDBI Bank a top-class lender on the lines of Axis Bank, which was once majority-owned by the government’s financial institutions. Axis Bank is today the third-largest private bank with 45% foreign holding. The government has indicated it is keen to give IDBI Bank a private sector character with less than 50% stake for itself. IDBI Bank’s share price increased over 70% to Rs 89.90 at the close on the BSE on Friday from a 52-week low of Rs 52.45 in August in anticipation of the proposed makeover.
“Depending on who the investors are and what stake they are willing to subscribe for, we are willing to discuss for them playing a more strategic role, which would potentially include a board seat as well,” Sinha said, indicating the process could start soon. According to rules by the Securities & Exchange Board of India, in a QIP of over Rs 250 crore, at least five investors have to subscribe through a book-building process.
Read full article: Economic Times
NEW DELHI: CBI is likely to register more FIRs into alleged loan defaults of Kingfisher even as it plans to Read more
Shares of Essar Oil has rallied 15% to Rs 213, also its 52-week high on the NSE in early morning Read more
State Bank of India (SBI) chairperson Arundhati Bhattacharya continues to be the most powerful woman in the Indian business sector, Read more
KUALA LUMPUR: With slew of measures putting back the economy on track, Prime Minister Narendra Modi on Saturday said reforms Read more
