While it is not clear what specific management rights LIC will get, they may include inducting nominees on board and influence in shaping business strategies, senior IDBI Bank executives said.
Asking about his stay at Bank beyond his current tenure, Sriram told media persons, “My tenure ends on 30th September and I intend to complete my tenure”. Sriram remained noncommittal on whether he would be reappointed for another term. The bank's Board in its meeting considered letter from LIC expressing interest in acquiring 51 per cent controlling stake, as a Promoter through preferential allotment of shares/open offer. The valuation will depend on the mode of raising its stake in the bank.
Sriram said all further action would only happen after banks gets the response of the Government of India.
The government owns 85.96 per cent of IDBI Bank, while LIC holds 7.98 per cent at end of June 2018, according to filings with BSE.
Meanwhile, government sources said it will take around five-six months for IDBI Bank to take all the regulatory approvals following which the preferential shares will be issued.
The bank will need to amend its Article of Association. This will be followed up by an approval from the Union Cabinet to reduce government’s stake in IDBI Bank below 51 per cent. The approval of the Union Cabinet may take about a month, government sources said.
IDBI will further seek nod from its shareholders, RBI and SEBI. The bank will have to issue a postal ballot notice and hold a separate general Meeting of its stakeholders on this matter.
IDBI Bank has already sought shareholders nod to raise capital upto Rs 50 billion by issuing fresh shares through various routes including Qualified Institutional Placement (QIP). Its annual general meeting slated for August 13,2018.
The Special Resolution passed at the last AGM held on July 18, 2017 for Issue of Capital under QIP route, is valid only for one year upto July 17, 2018 for QIPs.