The central government has asked the Securities and Exchange Board of India (Sebi) to relax the 25 per cent minimum public shareholding (MPS) rule for IDBI Bank so that it can go ahead with the privatisation of the lender.

The Centre is reportedly not willing to extend the December 16 deadline for the submission of bids.

Last month, the finance ministry had extended the deadline for potential bidders to submit queries on privatisation of IDBI Bank by 13 days till November 10.

North Block had floated the preliminary information memorandum (PIM) inviting bids for selling about 61 per cent stake in the lender on October 7. The deadline for raising queries and submission of bids by interested bidders was set at October 28 and December 16, respectively.

The Centre expects to complete the process of privatisation in the first half of next financial year.

After the stake sale, the joint stake of government and LIC will come down to 34 per cent from the present 94.72 per cent. While LIC presently holds 49.24 per cent, the government has a shareholding of 45.48 per cent stake in IDBI Bank. The remaining 5.28 per cent stake is with public.

The government is planning to sell 30.48 per cent while LIC will offload 30.24 per cent stake, aggregating to 60.72 per cent of the equity share capital of IDBI Bank. The buyer will have to make an open offer to the minority shareholders of IDBI Bank in line with Sebi norms.

The bidders will also have to clear the Reserve Bank of India’s (RBI) “Fit & Proper’’ assessment and get security clearance from the government in the EoI stage itself to be able to access IDBI Bank’s data room for due diligence.

As per the market regulator’s norms, listed firms (barring state-owned) need to have 25 per cent public shareholding. It has given promoters a period of three years from the date of listing to bring down their holding to 75 per cent. However, if it goes above 75 per cent in the case of open offers, they have been given an additional time of one year.

Earlier, the government has urged the market regulator to classify its holding along with that of LIC as public shareholders, which would automatically ensure compliance with the 25 percent public shareholding rule. Sebi, however, is yet to respond. The government feels that if this relief is given, it will be able to draw more suitors for the privatisation of the lender.

According to a CNBC TV-18report, while the government is sticking to the December 16deadline for receiving the expressions of interest, discussions are on with the markets regulator for some relaxations in the MPS rule.