The stock of IDBI Bank on Monday posted a steep decline after reports of the government stalling the privatisation process of the bank.
The stock declined as much as 16.5 percent to Rs 77 apiece compared to its previous close of Rs 92.2. Earlier to this, the stock opened 15.4 percent lower on the bourses at Rs 78 apiece.
It was trading at around Rs 77, regaining some ground but still about 15 percent lower than the previous close.
The selloff rally came after reports suggesting on Saturday that the government may stall the disinvestment process of the bank.
According to reports, the decision has been taken after the bids for the stakes fell short of the minimum price sought by the government, according to a report by Bloomberg citing sources.
While the government has a stake of 45.48 percent in the Mumbai-headquartered bank, the Life Insurance Corporation of India (LIC) holds 49.24 percent. This brings their combined ownership to 94.72 percent.
The Centre and the LIC were in the process of selling close to 60.72 percent of their combined stake. As per the current market price, this amounted to about $6.5 billion.
The sale of IDBI Bank was among the various proposed disinvestment plans of the government of which only Air India has succeeded so far. While the Centre also wanted to privatise Shipping Corporation, BEML (formerly Bharat Earth Movers Limited) and Bharat Petroleum, there has been no material progress on this front.
It was only IDBI whose stake sale plan was progressing until recently. While the plan has been shelved now, it would still take Cabinet approval to officially set aside the disinvestment process of IDBI Bank.
This development has come as a setback for the government which has planned to get Rs 80,000 through disinvestments in the next financial year.
In 2022, government-owned airline Air India was sold to Tata Group for Rs 18,000 crore. This has been the only case when the Modi government was able to privatise one of its public sector companies.
