IDBI BANK: After the RBI approved bids for privatizing IDBI Bank, the stock surged nearly 6% as a result   

 As soon as the RBI approves buds for privatisation, IDBI bank’s stocks surges by around 6%.In order for the bidders to move on to the next round as part of the privatization process, the RBI conducts an appraisal to verify that the companies are “fit and proper” and comply with the rules.

  

 Fit and Proper report on bidders 

In response to the Reserve Bank of India’s (RBI) ‘fit and proper’ report on bidders, which advanced the divestiture process, shares of IDBI Bank increased by over 6% to ₹93 per share today, July 18. In order to move on to the next round of the privatization process, the bidders must pass the central bank’s evaluation and satisfy the “fit and proper” requirements. 

The state-owned lender’s shares have gained by more than 33% this year, in contrast to the benchmark Nifty 50’s 12% gain. 

Divestment process 

In response to the Reserve Bank of India’s (RBI) ‘fit and proper’ report on bidders, which advanced the divestment process, IDBI Bank’s shares surged by about 6% to Rs 93 per share on July 18, as per sources cited by CNBC-Awaaz. 

IDBI Bank is owned by the central government to the tune of 45.5%. With a stake of more than 49%, LIC is the biggest stakeholder. 60.7 percent of the bank, comprising the government’s 30.5 percent and LIC’s 30.2 percent stakes, will be sold as part of the privatization plan. 

Market observers are anxiously anticipating the central bank’s evaluation of the bids as the bank has been scheduled for privatization for a number of years. Through its examination, the RBI makes sure that the bids are ‘fit and suitable,’ meaning they follow the rules in order to move on to the next round of the privatization process 

Shares of IDBI 

With almost 49.5 percent of the shares of IDBI Bank held by LIC, the federal government is the bank’s largest shareholder. The plan calls for selling 30.5% of the bank to LIC and 30.5% to the government, for a total of 60.7 percent of the bank. 

The government would make confidential IDBI Bank data, including as employee pension funds and insurance or medical coverage records, available to qualifying bidders once the RBI has finished the vetting process. 

Bidders  

Bidders for IDBI Bank need to disclose net profits in three of the previous five years and have a minimum net worth of Rs 22,500 crore to be eligible. The winning bidder must secure at least 40% of the equity capital for a period of five years, and the bidding consortium may consist of up to four members. 

IDBI recent updates about deposits 

IDBI Bank said in its Q1FY25 business update that total deposits increased by 13% YoY to Rs 2.7 lakh crore, from Rs 2.4 lakh crore during the same time the previous year. Net advances increased from Rs 1.65 lakh crore in Q1FY24 to Rs 1.9 lakh crore in Q1FY25, a YoY increase of 17%. 

The state-owned lender’s stock has increased by more than 33 percent so far this year, while the benchmark Nifty 50 has increased by only 12 percent.IDBI Bank has earlier reached a 52-week high on 6^th feburary,2024 of Rs 98 per share.