Large firms barred from bidding for IDBI Bank
Large corporate houses have been disallowed from being even a minority shareholder in a consortium wanting to bid for a 61 per cent stake in IDBI Bank, as the current RBI norms bar industrial houses from becoming bank promoters, an official said.
RBI guidelines allow industrial houses to hold a maximum of 10 per cent stake in private sector banks, but they cannot be a promoter.
Last week, the government along with LIC invited an Expression of Interest (EoI) for selling a 60.72 per cent stake in IDBI Bank. However, it barred large industrial houses from participating in the strategic sale.
According to the bid document, “large industrial/ corporate houses” have been defined as an industrial/ corporate group with assets of Rs5,000 crore or more with the non-financial business of the group accounting for 40 percent or more in terms of total assets/ gross income.
An official said that corporate houses have not been permitted to participate in the bidding process for IDBI Banktransactions as the RBI regulation clearly says that they cannot be the promoter entity in any bank.
“According to the IDBIBank bid document, the consortium, if they emerge as the winning bidder, would be classified as the promoter. Allowing corporate houses as part of the consortium member would mean they are part of the promoter group which is not allowed as per RBI guidelines,” the official said.
The RBI would be the final deciding authority on whether the interested bidder belongs to a large industrial house or to a company connected to a large industrial house.
The last date for putting in an EoI is December 16. Once the EoIs come in and the interested parties clear RBI’s “Fit and Proper” assessment and gets ministry of home affairs security clearance, data room access would be given to qualified bidders. It is only after due diligence, that bidders would put in financial bids.
The official said that the financial bids process is expected to be completed by the end of March next year.
Private banks, foreign banks, RBI-registered NBFCs, Sebi-registered Alternative Investment Funds, and a fund/ investment vehicle incorporated outside India would be allowed to submit bids.