The Reserve Bank of India is not likely to give any special dispensation to the IDBI Bank’s new buyer over the post-acquisition to reduce promoter shareholding in the long term, reported Business Standard.
The government-appointed intermediaries had sought relaxations in the RBI’s guidelines that require promoter shareholding to be cut down to 26 per cent in 15 years.
In its deliberations with the government and its advisors, the banking regulator communicated that its extant guidelines would prevail, an official said.
As promoters are required to reduce their shareholding in the long term, the Centre has been seeking some relaxation for the new owner to maintain continuity in running operations. Another round of discussions with the RBI is expected to take place soon after the roadshows with investors are complete, the official said.
The RBI, in November 2021, accepting several recommendations of an internal working group had said it was still examining one of the suggestions of the group on whether industrial houses be allowed to run banks.
Besides this, the request to remove the voting rights cap for promoters at 26 per cent currently was also declined by the RBI the Centre has agreed to this.
This means the voting rights of the new promoter shall be capped at 26 per cent, even if an investor picks up a 50 per cent stake or more in IDBI Bank. However, the Centre is clear that management control will be transferred to the new buyer, and the government and LIC will not interfere in the management of the lender even if they both continue to hold a residual stake.
The new buyer will get powers to appoint the new management and key personnel, and implement the best management practices at the lender.
The government currently owns 45.48 per cent in IDBI Bank, while LIC holds a 49.24 per cent stake. The government also has to finalise the eligibility criteria for investors, which has to meet the RBI’s fit and proper criteria and the exhaustive screening of shortlisted bidders interested in acquiring IDBI Bank.