Tag: IDBI

Tribunal directs Zee to respond to IDBI’s plea within two weeks, next hearing on October 11

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The National Company Law Appellate Tribunal (NCLAT) has directed Zee to respond to IDBI’s plea seeking insolvency proceedings within two weeks. The case is scheduled for its next hearing on October 11. This follows National Company Law Tribunal’s (NCLT’s) previous rejection of IDBI’s plea on May 10 to initiate insolvency proceedings against Zee Entertainment.

The IDBI’s plea was centered around outstanding dues of Rs 149 crore that it claims Zee owes. IDBI’s argument is based on Zee’s purported agreement to secure loans extended to Siti Networks through a DSRA Guarantee (Debt Service Reserve Account).

This move comes after the Mumbai bench of NCLT approved the Zee-Sony merger on August 11. IDBI Bank’s contention is that Siti Networks was obligated to maintain the DSRA, which would cover two quarters of interest of term loan, working capital, and one quarter of principal payment.

Zee had submitted a guarantee and was responsible for addressing any shortfalls in the DSRA. IDBI also stated that it had informed Zee about the relevant shortfalls in the DSRA.

As per the scheme of the arrangement, Sony will indirectly hold 50.86 per cent of the combined company. The founder of Zee will own around four percent and the rest will be with the other shareholders of ZEEL. Moreover, Sony Group will also pay a non-compete fee of Rs 1,100 crore to the Essel Group promoters.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IDBI Bank stake sale: Dipam secy says foreign institutions showing interest and eventually govt, LIC will exit

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey, in an exclusive interview with CNBC-TV18, said as per transaction advisers, IDBI Bank stake sale received a good response not just from domestic institutions but foreign institutions participated in the Expressions of Interest (EoIs) as well.

He said that the document of qualified bids would be submitted to RBI. As per Pandey, financial bids for IDBI Bank would be called only after due diligence, the minimum timeline for which is set to three-four months.  On January 7, Pandey tweeted: “Multiple EoIs were received for the strategic disinvestment of government’s and LIC’s stakes in IDBI Bank. The transaction will now move to the second stage.”

On January 11, the DIPAM secretary told news agency PTI that the government is expecting financial bids for the bank’s strategic sale by September.

He said many global as well as domestic institutions have shown interest in buying around 61 percent of the LIC and government’s stake in IDBI Bank and they had put in preliminary bids, the last date for the same was January 7.

“Overall, we are looking at financial bids at least before second half (October-March) of next fiscal year,” he told PTI.

Also Read: LIC to stay invested in IDBI Bank and rules out complete exit

Laying out the importance of competitive bidding, Pandey batted for the market to decide the exact price for any deal. “Asset quality should not be an issue in IDBI divestment,” he said a few days back.

With respect to the holding of the Union government and LIC in the bank, he said both would eventually want to make an exit. The government and Life Insurance Corporation (LIC) hold 94.71 percent stake in the bank, and the successful bidder will have to make an open offer to acquire a 5.28 percent stake from public shareholders.

Pandey said that IDBI Bank enjoys a Minimum Public shareholding (MPS) exemption till 2024. Centre had earlier this month, before the deadline of EoI for IDBI Bank, tweaked regulations to exempt listed companies in which the government and public sector undertakings (PSUs) together or individually hold a majority stake from the minimum public shareholding (MPS) norm. He also said that PEs could bid in a consortium, which is not mandatory.

The DIPAM secretary is also hopeful of completing the divestment of companies already announced by the centre. Pandey said that the Shipping Corporation of India (SCI) demerger notice is awaited but denied having any information about divestment in fertiliser companies. “There is nothing as far as Metals & Minerals Trading Corporation (MMTC) is concerned. As per transaction advisers, we are moving forward with BEML.”

Earlier this month, the Ministry of Corporate Affairs (MCA) granted permission to a plan to split the core and non-core assets of SCI that will pave the way for the government to divest its 63 percent stake in the company.

Also Read: Ministry of Corporate Affairs allows Shipping Corporation of India to split core and non-core assets

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IDBI Bank hikes interest rate on this special fixed deposit — Check details

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IDBI Bank, a public sector lender, has increased interest rate up to 7.60 percent for its 700-day ‘Amrit Mahotsav Deposit’ scheme customers, effective from December 26, 2022. The offer is valid only for a limited period. However, the deadline for the same has not been mentioned by the bank in the press release.

It must be noted that the 7.6 percent rate will be available only for senior citizens and general public will receive a rate of 7.10 percent. The bank has not said anything about its 500-day ‘Amrit Mahotsav Deposit’ scheme. As mentioned on bank’s website, general public fetch a return of 6.75 percent on the same, while senior citizens get 7.25 percent.

The interest rate structure is as under:

Under this fixed deposit scheme, customers are permitted to withdraw or close the account prematurely. ‘Naman Senior Citizen’ rates are not allowed to avail this scheme. Additionally, staff and senior citizen rates are not applicable to NRO and NRE term deposits.

All other features of term deposit as well as terms and conditions remain unchanged and are applicable here.

ALSO READ | Bajaj Finance hikes fixed deposit interest rates — launches new tenure of 39 months

For senior citizens, IDBI Bank provides the Naman Senior Citizen Deposit special retail term deposit scheme. This program’s previous expiration date was set for December 31, 2022, however, IDBI Bank has now extended it to March 31, 2023.

Here are the interest rates offered by IDBI Bank on its fixed deposit tenure:

The Reserve Bank of India (RBI) has hiked the key repo rate by 35 basis points to 6.25 percent on December 7, the fifth straight increase since May. In all, the RBI has raised the benchmark rate by 2.25 percent since May this year. As a result, banks are raising rates.

ALSO READ | Fixed deposit interest rates back to 2019-20 level? Check if the time is right to park your money

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IDBI Bank hits 4-month-high on reports government might sell 51% stake in lender

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of IDBI Bank Ltd surged over 9 percent and hit a four-month high at Rs 43.85 on BSE in the early morning trade after a report said that the government was planning to sell at least 51 percent in the state-backed lender.

At 1:00 pm, the IDBI Bank stock was trading at Rs 48.7, up 8.9 percent from its previous close on the BSE.

The government and state-owned Life Insurance Corporation (LIC) own nearly 94 percent in IDBI Bank. While the government owns 45.48 percent stake, LIC held 49.24 percent as of June 30, data has shown.

LIC and the government will take buyer interest by the end of September, as per a Bloomberg report. The report added that a group of ministers would make the final decision on the deal’s structure. According to the report, authorities also plan to cut management control.

CNBC-TV18 had on July 25 reported that the government and the LIC together might sell up to 65 percent stake in IDBI Bank.

Shares of IDBI Bank have jumped 6.3 per cent in the past 12 months, this has raised its market valuation to about Rs 42,470 crore.

During the first half of this year, the stock has declined 8 percent, while it has advanced 46 percent since the start of June.

Also read: Affle India gains after Goldman Sachs initiates coverage

The RBI will allow investors to buy a stake larger than 40 percent, as firms need permission from the central bank to purchase stakes above that threshold, while non-regulated firms are capped at purchases of 10-15 percent.

LIC had stated in its IPO filings in March that it would retain part of its 51 percent stake in IDBI Bank to benefit from bank assurance. As the government wants to exit the bank, it will be completely privatised. As a result of the acquisition of 82,75,90,885 additional equity shares, IDBI Bank became a subsidiary of LIC in January 2019.

Also read: This bank stock has gained over 24% in 5 days, here is why

As a result of LIC’s shareholding reduction to 49.24 percent, IDBI Bank was reclassified as an associate company on December 19, 2020.

Using policyholders ‘ funds, LIC also invested Rs 4,743 crore into IDBI Bank in October 2019. The bank further raised Rs 1,435.1 crore on December 19, 2020, by way of a QIP, which brought down LIC’s stake in IDBI to 49.24 percent.

In addition, other mid-sized public sector banks traded higher.

For the third consecutive session, the Nifty PSU Bank index gained 2.23 percent to 2,931.80. Overall, the index gained 5.14 percent.

Catch latest market updates with CNBCTV18.com’s blog

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Govt expects clarity from RBI on IDBI bank divestment by month-end

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The central government is expecting clarity from the Reserve Bank of India on the IDBI Bank divestment matter before the end of July.

Sources told CNBC-TV18 that if consultations with RBI are wrapped up this month, the government hopes to invite expressions of interest for the bank’s sale by August

The government is understood to have sought exemptions on the ownership cap for individual shareholders and private equity investors in private sector banks and also the 40 percent lock-in for promoters for a period of 5 years. The government has also sought clarity from RBI on which type of entities can form part of the bidder’s consortia.

The sources are hopeful the banking regulator may be open to some of the relaxations sought by them, depending on the nature of the investor. For instance, on the five-year timeframe for promoter lock-in with a minimum of 40 percent ownership, the government views that some headroom and flexibility could be possible from the RBI.

Also read: IDBI Bank invites bids for sale of property owned by Great Indian Tamasha Company

Both LIC and government will need to divest a substantial stake in IDBI Bank, if not exit the bank completely, to attract credible bids. LIC in the past has said they intend to retain some stake in IDBI for bancassurance which has the government’s in principle concurrence.

For IDBI, In the third quarter of the financial year 2022 (Q3FY2023), gross non-performing assets (NPA) were 20.56 percent, down from 31.78 percent in Q2 FY19 when LIC injected capital into the bank. The government owns 45.48 percent of IDBI Bank, while LIC owns 49.24 percent.

Why is the government disinvesting in IDBI bank?

In Budget 2021, the Government of India announced its intention to exit IDBI Bank.

The disinvestment strategy refers to the sale or liquidation of government-owned assets. Governments use disinvestment to reduce their fiscal burdens and raise money for public needs. They may also be done to privatise the assets.

Also read: IDBI Bank Q3 results: Net profit surges 53% to Rs 578 crore, income falls to Rs 5,772.86 crore

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

LIC DRHP says additional capital support to IDBI Bank will hurt insurer

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Any additional fund infusion by Life Insurance Corporation (LIC) in its associate, IDBI Bank, may have an adverse effect on the financial condition of the insurance behemoth, according to the recently filed draft prospectus. LIC had infused Rs 4,743 crore into IDBI Bank on October 23, 2019 using policyholders’ funds while the bank further raised Rs 1,435.1 crore on December 19, 2020 by way of a qualified institutional placement (QIP).

IDBI Bank has come out of the prompt corrective action framework since March 10, 2021, subject to compliance with certain conditions and continuous monitoring, as per the draft red herring prospectus (DRHP) of state-owned Life Insurance Corporation (LIC). The government expects to mobilise about Rs 63,000 crore from the proposed offer for sale (OFS) to meet the lowered disinvestment target of Rs 78,000 crore for the current financial year.

Also read: LIC DRHP Highlights: Jeevan Bima Nigam files DRHP; 25% of AUM in equities; check out key risks and other important dates

“In light of its financial condition and results of operations, we believe that IDBI Bank does not need to raise further capital at this time. However, if IDBI Bank requires additional capital prior to the expiry of the applicable five-year period and it is unable to raise capital, we would be required to infuse additional funds into IDBI Bank, which may have an adverse effect on our financial condition and results of operations,” as per the DRHP.

The five-year period would end in November 2023, as LIC got the approval letter from the Reserve Bank of India (RBI) on November 2, 2018 to acquire the additional equity shares in IDBI Bank.

Also read: ‘800-pound gorilla’ LIC’s IPO won’t drain out market liquidity directly from small investors: Shankar Sharma

IDBI Bank became a subsidiary of LIC with effect from January 21, 2019, following the acquisition of an additional 827,590,885 equity shares in IDBI Bank, which resulted in the life insurer owning 51 percent of the outstanding shares in the bank. On December 19, 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24 percent following the issuance of additional equity shares by IDBI Bank in a qualified institutional placement.

“Additionally, the RBI in its Approval Letter has stipulated that either IDBI Bank or LIC Housing Finance Limited, our Associates, will have to cease conducting housing finance activity within a period of five years from the date of the Approval Letter and that housing finance activity shall be conducted only by one entity,” it said. The impact of complying with this requirement of the RBI may have an adverse effect on the financial condition, results of operations and cash flows, it said.

Also read: LIC IPO: Life Insurance Corporation files DRHP; here’s a SWOT (strength, weakness, opportunity, threat) analysis

With regard to surplus distribution, it said the surplus in respect of the participating fund will be allocated between policyholders and shareholders in the ratio of 95:5 for fiscal 2022; 92.5:7.5 for each of fiscal 2023 and fiscal 2024 and then 90:10 from fiscal 2025 onwards. Till September 2021, the surplus distribution for participating funds between policyholders and shareholders was in the ratio of 95:5.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Will not sell stake in IDBI Bank at a loss: LIC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IDBI Bank’s current stock price is not reflective of its true value, Vipin Anand, MD, LIC India said in an interview with CNBCTV18. IDBI Bank shares are trading around Rs 35 and are pretty much flat year-on-year.

LIC holds 51 percent in IDBI Bank, and earlier this year, Anand said that they would reduce stake ahead of the 12 year deadline set by the RBI.

Anand told CNBCTV18 that he was hopeful of the bank coming out of the Prompt Correct Action framework and resume lending.
“IDBI Bank is doing extremely well. Last two quarters they have done well, they have shown good profit growth figures. We are hoping that very soon RBI will allow them to come out of PCA and start lending and that is when the real movement will start. As of now the price is not very attractive of the stock but as it comes out of PCA we can start thinking of..,” Anand said.

“The price of the stock in the market is not reflective of intrinsic value because we and the government hold the entire portfolio. So it will depend on the business performance and other factors. Definitely, we will not go with a loss,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IDBI posts quarterly profit after 13 quarters: Here’s what led to the improved performance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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IDBI turned the corner for the quarter ended March, after a long streak of losses. The stock market is delighted by the performance, and has pushed the shares 20 percent higher to Rs 24.25 per share. There only buyers for the stock at this point.

Here are the key takeaways from the performance:

Net interest income, the surprise package: The improvement in NII, which is the difference between interest earned on loans and interest paid out to depositors, improved significantly. This was driven mainly by a steep fall in interest expenses as a big chunk of high cost deposits may have either matured or been withdrawn. The figure also benefited from a tax reversal which is estimated between Rs 300-340 crore.

Net interest margin: The decrease in high cost deposits also boosted the net interest margin of the bank by over 150 basis points.

Business momentum: The strong quarterly performance notwithstanding, business momentum has been soft. The trend in deposit growth as well as loan growth was nothing to write about. On the positive side, the bank’s share of low cost deposits has improved.

Asset quality: Slippages of the bank declined sharply, pulling up both the gross and net non-performing asset ratios. The key challenge will be to sustain that, given the financial destruction in the economy from the COVID pandemic. The bank has the highest provision coverage ratio in the banking sector at 93.74 percent. Provision coverage is a term used to determine how much money is being set aside for gross NPAs.

Net profit: The bank has posted a quarterly net profit for the first time in three-and-a-half years.

Management commentary:

Had offered moratorium to all our borrowers, some have opted out.
68% of our retail borrowers have availed of the moratorium.
69% of our corporate borrowers have availed of the moratorium.
51% of our mid-corporate segment have availed of the moratorium.
Expect the IDBI Federal Life deal to be closed by September this year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2020: Disinvestment of BPCL, SCI and Concor in first half of FY21, says DIPAM secretary Pandey

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government has said it will sell a part of its stake in Life Insurance Corporation (LIC) as it presses ahead with disinvestment, or share sale of PSUs, to tide over its fiscal troubles. Cutting stake in India’s largest insurer is expected to help the government meet its divestment target, which has been increased to Rs 2.1 lakh crore in the financial year 2021 compared with Rs 1.05 lakh crore in the current fiscal.

Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management (DIPAM), which oversees the government’s disinvestment programme, said share sales in at least three PSUs — Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI) and logistics company Container Corporation of India (Concor) — will be completed in the first half of the next financial year starting April. Below are edited excerpts of an interview:

You have got the onerous task of having to deliver on Rs 2.1 lakh crore. How are you going to be able to do it given the experience? I mean you were left with a swift target of Rs 2.05 lakh crore in this fiscal year. It’s nowhere close to that. How do you get to two?

Some of the big-ticket disinvestments that the government announced and basically they are strategic in nature, in the nature of privatisation of very large assets. BPCL is a $15 billion market cap company and CONCOR is Rs 35,000 crore and there is Shipping Corporation of India (SCI), these are very large companies. The decisions will come only in November and therefore, we are moving forward and we hope that although we may not be able to conclude that in this current financial year, they will spill over to the next year and that too in the first half of the next FY.

So you believe that all 3, that is BPCL, SCI and CONCOR, will be done in the first half of the next fiscal?

Yes.

You feel confident about being able to do that?

Yes, we are moving on that basis. Similarly, Air India expression of interest (EoI) is as well out and BPCL EoI will be out very soon. So these are the big-ticket disinvestments we are working on which will actually fructify, the actual receipts will come in the next FY. The 2.1 lakh crore – there are two parts to it as well, one is Rs 90,000 crore which is for the disinvestment of the financial sector particularly IDBI and LIC.

But is it only IDBI Bank or you are looking at any other bank as well?

Initially, the FM had announced the two, that’s LIC and IDBI. LIC is in the nature of IPO.

I was asking the economic affairs secretary on how much the government would offload in that IPO as and when it is done. What is the expectation?

That will be the structuring of the deal. We will have to value, we will have to do a lot of groundwork before we can actually do that.

What is the timeline that you are looking at as far as the LIC IPO is concerned? You were very clear that you believe SCI, BPCL and perhaps even Air India will get done in the first half of the next FY. When will we see LIC?

We have to work out on LIC with the department of financial services to prepare the structure and timeline.

And IDBI Bank?

The same. It’s the department of financial services which will be a key interlocutor with us.

Do you believe that those may take longer than companies like BPCL, for instance?

Yes, of course, because BPCL and others we have already progressed. LIC and others may require statutory changes.

On BPCL specifically, you have done the roadshows, you are hoping that the EoI will be put out very shortly. What is the feedback that you are getting that’s coming from investors?

We have sufficient interest for this company.

Outside of firms like Saudi Aramco, can you name some of the other companies who have expressed interest?

It’s not good to name because ultimately it will be through competitive bidding that we will actually discover the bidder.

When do you expect the bidding process for BPCL to take place?

We have a two-stage process. The first stage process where we have an EoI and we get to the qualified bidders and after due diligence, they participate in financial bidding. So we hope to conclude these things in the first half of the next financial year.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow