Centre to allow foreign funds to own over 51% in IDBI Bank

The government and LIC together hold 94.71% in IDBI Bank and are looking to sell 60.72%

The Central government will allow a consortium of foreign funds and investment firms to own more than 51 per cent in IDBI Bank Ltd, according to a government clarification on Tuesday.

The current guidelines of the RBI restrict foreign ownership in new private banks. The central bank's residency criteria for promoters applies only for newly set up banks and would not apply to an existing entity like IDBI Bank, the Department of Investment and Public Asset Management said in a response to interested bidders' queries.

"The residency criteria would not apply to a consortium consisting of funds investment vehicle incorporated outside India," it said.

The Centre and RBI would also consider relaxing the five-year lock-in period for shares if a non-banking financial company is merged into IDBI Bank, it said.

The clarifications come ahead of a Dec. 16 deadline to submit expressions of interest for a majority stake in IDBI Bank, one of the few lenders that the government is trying to offload its stake in.

The government and LIC together hold 94.71 per cent in IDBI Bank and are looking to sell 60.72 per cent.