The government has reached out to the capital markets regulator Securities and Exchange Board of India (Sebi), seeking a two-year relaxation in the minimum public shareholding (MPS) norms for IDBI Bank once it is privatised, reported The Economic Times.
Under the existing rules, listed firms are meant to have a public shareholding of at least 25 per cent within three years of being listed.
IDBI Bank is already listed but state-run enterprises are exempt from the minimum public holding rule.
The bank would need to comply with this rule within three years once it is privatised. The relaxation is expected to make the strategic sale of the bank more attractive to a potential investor as there will be more time for complying with the norm.
In August 2021, the finance ministry inserted a new rule in the public listing norms in the Securities Contracts (Regulation) Rules, 1957.
This exempted listed public sector firms from the mandatory 25 per cent public float norm.
Currently, the government and the Life Insurance Corporation of India (LIC) together hold 94.7 per cent of the bank while the remaining 5.3 per cent is with the public.
The government has sought an additional two years, which will give the eventual strategic investor five years to comply with the minimum public holding rule.