The government has approved the sale of its entire stake in IDBI Bank, along with the Life Insurance Corporation of India’s (LIC) holding.

The exact quantum of stake dilution, however, will be decided before the request for proposal stage of the transaction, the Department of Investment and Public Asset Management (DIPAM) clarified on 9 July.

The central government and LIC together hold more than 94% stake in IDBI Bank. While LIC owns 49.24% stake in IDBI Bank along with management control, the government of India holds 45.48%.

In May, the Cabinet had given its approval to the government and the LIC to offload their full stakes in IDBI Bank, along with a transfer of management.

The DIPAM has clarified that since LIC's stake will be sold alongside the government's shareholding, a single transaction advisor would manage the entire share sale process.

The exact quantum of stake dilution will be determined as “we go through the transaction and ascertain investors’ interest and market appetite,” the DIPAM said.

Last month, the DIPAM had invited bids from transaction advisors and legal firms for managing and advising on the strategic sale and transfer of management control in IDBI Bank. The last date for submission of bids has now been extended to 22 July, from the earlier deadline of 13 July.

As per the eligibility criteria outlined, the bidders should have advised at least one transaction of strategic disinvestment/ strategic sale/ M&A activities/ private equity investment transaction of the size of Rs 5,000 crore or more during the period from April, 2016 to March, 2021.

Insurance giant LIC had acquired controlling stake in IDBI Bank in January 2019.

Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal.

The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.

Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, while Rs 75,000 crore would come as CPSE disinvestment receipts.