The proposed stake sale in IDBI Bank by the government may run into a regulatory obstacle on the issue of minimum public shareholding, reported Business Standard. The Centre and the Securities and Exchange Board of India (Sebi) may be at odds over a minimum public shareholding in the lender.
Sebi is concerned over the low public float in the lender and the proposed strategic disinvestment may extend the road map to achieve this, a senior regulatory official privy to the discussion said.
The government has sought a special dispensation from Sebi with regard to the public float in IDBI Bank. However, the regulator, which is examining the request, is learnt to be not keen on providing it because the float is already low, the official added.
Life Insurance Corporation (LIC) and the government hold 49.24 per cent and 45.48 per cent, respectively, in IDBI Bank. Together they hold 94.72 per cent while the public shareholding is 5.28 per cent.
Earlier this month, the government and LIC decided to offload a little over 30 per cent each in IDBI Bank. They issued a preliminary information memorandum, inviting expressions of interest for an aggregate 60.72 per cent stake, along with management control.
Sources said the government had sought Sebi’s nod to reclassify the residual stake in IDBI Bank as “public” shareholding. This is because the Centre is relinquishing management control and is acting as an ordinary shareholder.