The government and state-owned insurer LIC, who will continue to hold a significant shareholding in IDBI Bank post its privatisation, will not veto any proposals of the new owner as part of their plan to give the incoming promoters a free hand, a senior official said.

The government earlier this month invited bids for the sale of a 60.72 per cent stake in IDBI Bank, which is 45.48 per cent owned by the government and 49.24 per cent by the LIC.

At Friday’s closing price of Rs 44.30, IDBI Bank is valued at Rs 47,633 crore but the government is looking for at least a 30 per cent markup in the sale. At the current price, sale of 61 per cent stake would fetch about Rs 29,000 crore to the government.

The official said post privatisation, the government and LIC shareholding will come down to 34 per cent but they do not intend to move in tandem to block any special resolution proposed by the new promoter.

This is with a view to assuaging the concerns of investors.

“There should not be any such concern. If we are selling a 60.72 per cent stake and transferring management control, it should be clear to investors that we are not interested in controlling the institution and hence will not oppose any resolution,” the official said.

“We will give an assurance on this at the RFP or financial bids stage to the qualified bidders for IDBI Bank,” the official said.

There have been concernsin some quarters that the government and LIC holding a 34per cent stake in IDBI Bank after its privatisation may act as a deterrent to bidders as a shareholder or a group of shareholders together holding 25 per cent or more of the shares can effectively oppose a special resolution.

Allaying such a concern, the official said “if that was the intent, then we would not have gone ahead with selling about 61 per cent stake. We could have sold less. The government and LIC would not act together in opposing any resolution and we will clarify that in writing in the share purchase pact.”

The government is expecting to get the financial bids for IDBI Bank by March and complete the process of privatisation in the first half of next fiscal beginning April 2023.