Disinvestment is a strategy used by investors to unload or dispose of an asset or an interest in it partially. Governments implement disinvestment measures to allocate resources more efficiently. The process for the strategic disinvestment of IDBI Bank with the transfer of management control began on October 7, 2022, when the government released a preliminary information sheet to request expressions of interest from prospective buyers. Along with the transfer of management control in the bank, the Indian government will sell 30.48% of its investment in the bank, and the Life Insurance Corporation of Indiawould sell 30.24%, totalling 60.72%. This will undoubtedly relieve LIC of its burden and improve investors sentiment for the insurance giant. While being kept afloat by bailouts from the taxpayer’s purse with no accountability, IDBI Bank built up additional bad loans and losses. The government currently owns 45.48% of the bank, while LIC, the bank's promoter owns 49.24% whereas ownership by public shareholders is 5.28%. Roadshows were held by the finance ministry, and significant overseas investors were approached. Strategic investors who are interested in buying the bank have until October 28 to submit any queries they may have on the preliminary information memorandum released on Friday. Expressions of interest are due by December 16. The Reserve Bank of India will only accept offers from firms who are qualified to engage in the transaction, have been deemed "Fit and Proper," and have been granted a security clearance by the Indian government. As a result, people who are not qualified to manage public savings entrusted in a bank are instantly discouraged. In the second phase of the transaction, the Request for Proposal document will only be provided to qualified bidders. They will be given more information about the Bank's activities and operations at this point, and they will be able to assess and submit bid accordingly. The bank would accept these bids from private and international banks, NBFCs, SEBI registered alternative investment funds. For companies wishing to bid either individually or through a consortium, which can contain up to four businesses and have a lead member holding at least a 40% share with a minimum net worth of 22,500 crores. For the optimum growth of IDBI Bank, a prospective investor is expected to infuse additional capital, deploy cutting-edge technology and ensure effective management practices. Buyers may request further guarantees from all parties to address fears regarding future interference in management decisions. Thank you.
Very well written
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