The government may invite expressions of interest for IDBI Bank sale by April, a government official in the know told CNBC-TV18.

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"The IDBI stake sale process has been vetted by RBI and the stake sale will happen over the course of nine months. A 26 percent promoter cap for private sector banks is not a constraint for stake sale," said the official.

The government and LIC will sell their entire stake in IDBI Bank. "Promoter holding capital in private banks is not a constrain for IDBI Bank sale. We are confident of a good response to IDBI Bank expressions of interest," the official added.

Currently, GoI and LIC have 45.48 percent and 49.24 percent shareholding, respectively, in IDBI Bank, with the latter being the promoter of the Bank with management control.

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LIC DRHP says additional capital support to IDBI Bank will hurt insurer

According to the recently filed draft prospectus by LIC, any additional fund infusion by the insurance behemoth in its associate, IDBI Bank, may have an adverse effect on the financial condition of the company.

LIC had infused Rs 4,743 crore into IDBI Bank on October 23, 2019, using policyholders' funds while the bank further raised Rs 1,435.1 crore on December 19, 2020, by way of a qualified institutional placement (QIP).

IDBI Bank became a subsidiary of LIC with effect from January 21, 2019, following the acquisition of an additional 827,590,885 equity shares in IDBI Bank, which resulted in the life insurer owning 51 percent of the outstanding shares in the bank.

Also read: LIC DRHP Highlights: Jeevan Bima Nigam files DRHP; 25% of AUM in equities; check out key risks and other important dates

On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 percent following the issuance of additional equity shares by IDBI Bank in a qualified institutional placement.

IDBI Bank Ltd in January reported a 53 percent jump in standalone net profit at Rs 578 crore for the third quarter ended December. In the corresponding quarter last year, the LIC-owned bank posted a standalone net profit of Rs 378 crore.

First Published:Feb 21, 2022 8:54 AM IST