After 5 years, Centre to call off IDBI sale

NEW DELHI: Five years after starting the process, the Centre has called off the disinvestment of IDBI Bank after the bids received found to be lower than the reserve price.Those familiar with the process said govt will decide the future course of action, including calling for fresh bids so that it can realise the best value. Given the uncertainty caused by the conflict in West Asia, the process may, however, take time and a formal decision to stop the process will have to be approved by the Union cabinet.IDBI was the only privatisation plan that was moving, with others including Shipping Corporation, BEML and Bharat Petroleum having been postponed indefinitely. Govt’s plan to sell its stake in a public sector bank and an insurance company has made no progress, leaving Air India stake sale as the only case of privatisation during NDA’s 11-year run at the Centre.Fairfax, owned by billionaire investor Prem Vatsa and an Emirati bank were said to be the only two remaining players in the fray for the stake being offered for sale by govt as well as LIC, which is the largest shareholder.The development will also come as a blow to govt’s disinvestment target, given that it had budgeted to mop up close to Rs 80,000 crore in the next financial year. A section within govt was also seeing the stake sale to set off the stage for more disinvestment in the coming months as opposed to the current strategy where the Centre has relied on offers for sale and initial public offers to generate resources.The choppy markets have already made the task difficult and with valuations falling, govt had postponed the planned sale of shares in LIC to the next fiscal year. IDBI Bank shares fell 6.6% to close at Rs 92.20 on BSE.For IDBI Bank too, this is the latest setback in its evolution plan, which has seen the Centre pump in large sums of money to revive it after a disastrous effort to convert it into a universal bank, with a large pool of legacy bad debt and sticky assets.In fact, LIC itself was roped in by govt as a bailout of sorts and made to buy into what was originally a development financial institution that survived on subsidised capital from the Centre, which stopped flowing once the economy was liberalised and RBI put in place a strong regulatory framework.