IDBI Bank managing director and chief executive officer Kishor Kharat on Friday said the lender is not in discussions for a merger with the L&T Finance Holdings.
The bank’s transformation process has been initiated as outlined by finance minister Arun Jaitley but there was no proposal of a merger with L&T Finance, he said.
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“We have not got any formal proposal from L&T Finance (Holdings) on stake sale. There is no plan of a merger (with L&T),” Kharat said, indicating that the process will take some time to fructify amid strong opposition from the bank’s employee unions over privation of the state-owned lender.
In the Budget for 2016-17, Jaitley had said the government is looking to bring down stake in the bank to below 50 per cent, in line with the strategy adopted for Axis Bank.
Kharat said the bank has not yet done its overall valuation for stake sale purpose.
The lender, though, recently concluded valuing its real estate assets as required by the Reserve Bank of India, Kharat said after a meeting with the finance ministry officials on Friday.
IDBI Bank shares ended up 0.2 per cent at Rs 72.50 on the National Stock Exchange on Friday. The bank’s bad debts were 8.94 per cent of its loans in the October-December quarter.
The government had in December approved IDBI Bank selling stake to institutional investors, a move opposed by its employees unions. The government owns 80.2 per cent of the bank. In February, the Securities and Exchange Board of India (Sebi) approved its plan to raise capital by issue of equity shares aggregating to Rs 3,771 crore through a qualified institutional placement.
Earlier this month, Minster of State for Finance Jayant Sinha had said the government is consulting all stakeholders as part of transformation of IDBI Bank. “…The IDBI transformation process is under way. And we are in the midst of working through that process,” Sinha had said on April 8.
The government is not legally bound to maintain majority stake in IDBI Bank, unlike in the case of most other public sector banks wherein the Centre is required to hold minimum 51 per cent stake as mandated in the Banking Regulation Act.
Last month, the bank’s board approved in-principle its proposal for issuance of rupee bonds up to a limit of ·20,000 crore in one or more tranches during 2016-17. The lender has drawn up a three-year medium-term plan aimed at doubling its business, reducing bad loans, rebalancing its loan portfolio and improving low-cost deposits.