BENGALURU: The government is in talks with the market regulator seeking to relax a key public shareholding norm for the potential buyer of IDBI Bank in a bid to attract a larger pool of suitors, according to two sources.
Earlier this month, bids were invited for a 60.72% stake in IDBI Bank which is 45.48% owned by the government and 49.24% by state-owned Life Insurance Corp (LIC) after dragging feet for years.
The Securities and Exchange Board of India (SEBI) mandates a minimum 25% of public shareholding for all listed entities, excluding state-owned companies, within three years of listing.
The government has asked SEBI if it can classify the Centre and LIC’s remaining stake of about 34% after the sale as public float, which will help the new buyer meet the minimum public shareholding norm without diluting its ownership, one of the sources, who did not want to be named, said.
“If SEBI allows both government and LIC to be classified as public shareholders, the minimum public shareholding criteria will be automatically met,” the second official said.
IDBI Bank, being majority owned by the government and a quasi-government firm, is currently exempt from the shareholding norm and the promoters - LIC and government - hold 95% of the firm.
Once approved by SEBI, the relaxed norm will be shared with buyer when the government signs the share purchase agreement with the winning bidder of IDBI Bank, an official said.
The finance ministry did not reply to request for comments.