After years of wait, IDBI Bank’s stake sale process has gathered fresh momentum with the Reserve Bank of India (RBI) giving its 'fit and proper' approval on bidders for the lender.

The RBI has reportedly given its green signal recently on all but one bidder which happens to be a foreign participant. The foreign entity reportedly has not provided the necessary information; nor has its home regulator shared the data.

The RBI’s ‘fit and proper’ report on bidders for IDBI Bank is an important step ahead in the divestment process. The RBI had to assess whether the bidders met the regulatory standards.

The process for the government’s stake sale in IDBI Bank had started in May 2021.

The Narendra Modi government’s stance on privatisation will soon be more clear in the new political scenario where it depends on coalition partners. Finance Minister Nirmala Sitharaman will present the Union Budget on 23 July. 

The government intends to sell 60.7% stake in the bank, consisting of its own 30.5% and the Life Insurance Corporation’s (LIC) 30.2%. While the government owns 45.48% of the bank, LIC holds a 49.24% stake. Public shareholders have the remaining 5.28% stake.

In January 2023, the government received the expression of interest (EoI) from multiple bidders. After the ‘fit and proper’ clearance report from the RBI, the eligible bidders could do due diligence on IDBI Bank. The financial bids would follow.