The Government of India is expected to delay the divestment of its residual stake in IDBI Bank until March 2021 due to low valuations amid the Covid-19 pandemic.
In addition to the residual divestment in IDBI, the government is also planning to sell its stake in LIC through an Initial Public Offering (IPO).
However, given the current market conditions, the government is mulling to postpone the stake sale in IDBI Bank as well as the LIC IPO listing.
The Indian government aims to garner INR900bn ($11.91bn) from the IDBI stake sale and LIC listing out of the total disinvestment target of INR2.1trn ($27.3bn) in the current fiscal year.
According to sources, even if the market condition improves the government may have to cut down its expected realisation from stake dilution of both LIC and IDBI Bank.
The plans to divest residual stake in IDBI Bank and release LIC shares for IPO took place in February while presenting the Union Budget 2020-21.
The government currently owns a 100% stake in LIC, while it owns 47.11% stake in IDBI Bank which it plans to exit fully.
The state-owned insurer Life Insurance Corporation (LIC) bailed out IDBI Bank last year and became its majority shareholder by buying a 51% stake.
Since then, LIC has been working on a turnaround plan to boost the profitability of IDBI Bank.