Synopsis:
SEBI has approved reclassifying LIC as a public shareholder in IDBI Bank, subject to conditions including capped voting rights, reduced shareholding, and mandatory reclassification filing post strategic disinvestment.
During Monday’s trading session, shares of a private sector institutional lender are in focus on the stock exchanges, after the bank received approval from the Securities and Exchange Board of India (SEBI) for the reclassification of Life Insurance Corporation of India (LIC) as a public shareholder.
At 01:22 p.m., the shares of IDBI Bank Limited were trading in the green at Rs. 95.09 on BSE, up by nearly 0.1 percent, as against its previous closing price of Rs. 95, with a market cap of Rs. 1.02 lakh crores. The stock has delivered negative returns of over 1 percent in the last one year, but has gained by about 2 percent in the last one month.
What’s the News
In light of the ongoing strategic disinvestment of the IDBI Bank Limited as approved by the Cabinet Committee on Economic Affairs on 5th May 2021, the bank received an update from the Department of Investment and Public Asset Management (DIPAM), Government of India.
As per the latest regulatory filings, DIPAM has informed the bank that the Securities and Exchange Board of India (SEBI) has granted approval for the reclassification of the Life Insurance Corporation of India (LIC) as a “public shareholder” of IDBI Bank.
This reclassification will take effect subject to certain conditions being met upon completion of the disinvestment transaction. Among these, LIC’s voting rights in IDBI Bank must not exceed 10 percent of the total net effective voting rights. Further, as directed by the RBI, LIC is required to reduce its residual shareholding in IDBI Bank to 15 percent or below within two years from the date of closure of the strategic disinvestment.
Additionally, once the transaction is finalised, LIC will be required to submit a reclassification application to the Indian stock exchanges in order to formally update its shareholder status.
In 2019, LIC acquired a 51 percent stake in IDBI Bank as its recapitalisation needs created an opportunity. The stake has since come down to 49.2 percent. The government and LIC will jointly offload part of their holding during the privatisation process, while LIC intends to retain a significant stake and continue its association with the bank even after the sale.
Financials & more
IDBI Bank reported a marginal decline in its net interest income (NII), showing a year-on-year decrease of around 2 percent from Rs. 3,241.6 crores in Q1 FY25 to Rs. 3,175.3 crores in Q1 FY26. In contrast, its net profit increased during the same period from Rs. 1,739 crores to Rs. 2,024 crores, representing a rise of about 16 percent YoY.
IDBI Bank Limited is a banking company engaged in the business of providing a range of banking and financial services, including retail banking, wholesale banking and treasury operations.
The bank is a diversified financial services entity offering a wide range of banking and financial services to corporate and retail customers throughout India. It has an Offshore Banking Unit at the International Financial Service Centre (IFSC), GIFT City, India.
Written by Shivani Singh
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