India doesn’t expect to complete sale of IDBI Bank this fiscal year

MUMBAI (Reuters) – The Indian government does not expect to conclude the sale of IDBI Bank by the end of the financial year on March 31, 2024, a top finance ministry official told reporters.

The federal government, which owns 45.48% of IDBI Bank, and state-owned Life Insurance Corp of India, which holds 49.24%, together plan to sell 60.7% of the lender.

Kotak Mahindra Bank, Canadian billionaire Prem Watsa-backed CSB Bank and Emirates NBD have submitted initial bids for a majority stake in IDBI Bank and the Reserve Bank of India (RBI) has been vetting bidders since April.

“We practically don’t think that before March we can conclude (the sale of IDBI Bank),” said Tuhin Kanta Pandey, the secretary of the Department of Investment and Public Asset Management.

Pandey added that the RBI was still conducting the vetting process. The government had previously expected that process to be completed by the end of October, raising market hopes that the sale could close by the end of March.

The sale of a majority stake in IDBI Bank has been seen as a first step towards privatising other state-run banks, and delaying the deal means the government will likely miss its divestment target of 510 billion rupees by a bigger margin.

Since the beginning of the current fiscal year in April, India has raised only 80 billion rupees by selling stakes in state-run firms.

Such sales are a key revenue raising measure that have helped Prime Minister Narendra Modi’s government spend record sums on building infrastructure. But recently, the process has slowed as the government’s focus has shifted towards national elections due next summer.

(Reporting by Jayshree P Upadhyay; Editing by Mark Potter)