IDBI Bank privatisation kicks up expectations that bank ownership rules may be eased for foreign investors

Since the sale of IDBI bank share is the last, there is an increasing expectation that the government can consider mitigating the bank’s ownership rules, especially for foreign players, given a good amount of foreign institutions in the deal.

According to the sources, there were some discussions on this issue in the government and the Indian Reserve Bank, but they are still in an initial stage without a concrete proposal.

At present, foreign direct investment in private banks is allowed by up to 49 % through the automatic track and more than 74 % with government approval. Foreign investment in public sector banks is allowed by only 20 % with the approval of the government. However, foreign investment rules set 26 % voting rights to bank investors and investments by financial institutions amounted to 15 %.

The life and life insurance center in India currently has 94.71 % share in IDBI. As part of the lack of investment, the center will sell with LIC 61 % stake in the lender. This includes 30.48 % share of the government of India and 30.24 % of LIC. In 2019, IDBI was reclaimed as a private sector lender after obtaining its shares by LIC.

The broken entities of IDBI Fairfax India Holdings, Emirates NBD and Kotak Mahindra Bank include.

A person familiar with the development pointed out, adding that over the past three years, there have been many discussions on how the bank made an attractive bet for investors over the past three years, there have been many discussions on how to make the bank an attractive bet for investors.

The government hopes to end the sale of shares by October or November this year, and is expected to achieve about 50,000 rupees. Earlier this month on July 9, the group met between the IMG on non -investment to discuss the stock purchase agreement to treat IDBI.

Following the sale of a 20 % stake in yes bank to the Sumitomo Mitsui Financial Group, Fitch Ratings said on May 27 that the deal could pave the way for other foreign expatriates in the Indian banking sector. “Yes, the YES banking is the first major acquisition by a foreign bank and SMFG will give great control over a yes bank as a larger shareholder with two appointed in the Board of Directors. It can pave the way for future transactions, if the approval of the Reserve Bank in India (RBI) on the precedent of the treatment,” has been done.

He said, “We expect that there will be opportunities for investments in medium -sized banks in India, which is looking to expand their presence in India, although we believe that RBI preference is for foreign -performance foreign banks and governance to obtain shares greater than 26 % through the fully organized Indian allocations in India,” he said.