IDBI stake sale: Government stake sale will not affect IDBI’s plans, says IDBI Bank CEO | India Business News
MUMBAI: IDBI Bank will continue to be a professionally managed organisation after the government’s stake sale. Its new shareholders will be able to voice their opinions only on the board. Bidders would also have to clear the RBI’s ‘fit and proper’ criteria before picking up a stake in the LIC-controlled bank.
Speaking to TOI, IDBI Bank MD & CEO Rakesh Sharma said, “While the bank may have new promoters, it will continue to be run by its management and board according to its policies. The new shareholders may have some focus area, but they will have to come through the board.”
Last week, the Cabinet had approved strategic disinvestment in the transfer of management control in IDBI Bank. Even as the government has announced its stake sale, IDBI Bank is going ahead with obtaining shareholder approval for raising capital. According to Sharma, this enabling resolution is an annual exercise so that the bank can access markets without delay.
“Our capital adequacy is quite comfortable. For the 8-10% growth we have projected, our current capital is adequate for two years. However, Private banks typically have a capital adequacy ratio of 15-16% and our capital adequacy ratio is 15.6% — we have decided to depend on our capital,” said Sharma.
The lender is also making any changes to its plans on divestment. “There is no pressure to monetise assets for capital adequacy. The purpose is to make a good profit and where we see a good deal, we will go ahead,” said Sharma. He added that a decision on divestment of subsidiaries would be taken by the board and that will not change unless someone decides to bring in a lot of capital into the subsidiary.
IDBI Bank’s board has 14 members — two nominees each from the government and LIC, three whole-time directors from the management and seven independent directors.
Despite being indirectly majority government-owned, IDBI Bank is already classified as a private sector entity and Sharma was appointed as CEO based on a recommendation by the board and approval from the RBI. In government banks, the appointment takes place through recommendations from the Banks Board Bureau.