|
The government has clarified that the reserve price for the strategic restructuring of IDBI Bank was neither reduced nor increased during the second bidding round, while the revised process helped raise the discovered bid price by Rs 3,917 crore, according to a Finance Ministry release.
The reserve price was neither decreased, nor increased, and the first round itself became functus officio after the initial bids were not approved, the ministry said. The ministry added that the procedure for the second or best-offer round was determined by the Core Group of Secretaries on Disinvestment (CGD), which had been empowered by the Cabinet Committee on Economic Affairs (CCEA) to address procedural issues and make necessary deviations for the effective implementation of strategic transactions. Clarifying the process, the ministry said the initial bidding round was conducted in 2025-26 under the Department of Investment and Public Asset Management's (DIPAM) indicative guidelines, which allow flexibility in complex strategic transactions. It said there was no predetermined benchmark for bidding, as bidders independently assess the enterprise and submit confidential offers. Independent agencies are appointed to conduct valuations, which are subsequently used as comparators to assess the reasonableness of the bids. The ministry said the first round became "functus officio" after the initial bids were not approved, following which the CGD determined the procedure for the best-offer round. It added that the entire valuation methodology was reviewed by the CGD in April 2026 before the invitation of fresh offers. The release further explained that two independent advisers carried out valuations using separate methodologies. The business valuation used the market multiple method, with listed public sector banks serving as comparable companies, while the asset valuation considered various factors, including disputed tax demands. On the tax-related indemnity, the ministry said the potential liability was only Rs 627 crore, while the discovered bid price increased by Rs 3,917 crore. It described the possibility of such a liability arising as a low-probability event and said the arrangement would be revenue-neutral for the government, as reimbursement would apply only if the additional tax demand was actually paid. The clarification comes amid scrutiny over IDBI Bank's proposed privatisation, with employees raising concerns over reservation provisions and protection of service conditions and pension benefits. The Union Cabinet approved the Rs 52,878 crore sale of a 60.72 per cent stake to a subsidiary of Canada's Fairfax Financial Holdings on October 14. Finance Minister Nirmala Sitharaman described it as a "strategic restructuring" rather than strategic disinvestment, noting that the government and LIC will retain stakes of 15 per cent and 19 per cent, respectively, after the transaction. (ANI)
|
