IDBI Strategic Disinvestment

Context: 

The Department of Investment & Public Asset Management (DIPAM) has issued a Request for Proposal (RFP) to engage an asset valuer for the strategic disinvestment of IDBI Bank. 

More on News:

• RFP for Asset Valuer: DIPAM, representing the Government of India (GoI) and LIC, seeks a reputable asset valuer registered with the Insolvency & Bankruptcy Board of India (IBBI) to value IDBI Bank’s assets and assist in the strategic disinvestment process.
• Ownership Details: As of March 31, 2023, LIC holds 49.24% while the Government owns 45.48% of IDBI Bank. 
  • The strategic disinvestment plan aims to sell 30.48% of the Government’s stake and 30.24% of LIC’s stake, totaling 60.72% along with a transfer of management control in IDBI Bank.

Disinvestment in India:

• Disinvestment is the process of selling or liquidating government-owned assets, including Central and state public sector enterprises and fixed assets.
• Objectives:
  • Fiscal Relief: Disinvestment is undertaken to reduce the fiscal burden on the government, helping it manage finances more effectively.
  • Resource Generation: It aims to raise funds for specific needs, such as bridging revenue shortfalls from other sources.

Strategic Disinvestment:

• Ownership Transfer: Strategic disinvestment involves transferring ownership and control of a public sector entity, often to a private sector entity.
• Privatization: It represents a form of privatization, with the government selling a substantial portion of its shareholding (up to 50% or more) in a central public sector enterprise (CPSE) and transferring management control.
• Economic Principle: Guided by the principle that the government should not engage in manufacturing or providing goods and services in sectors with competitive markets.

News Source: Business Standard

DOWNLOAD PDF