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Report: Indian government considers sale of entire IDBI Bank stake

The Indian government is considering selling its 85.96% stake in IDBI Bank Ltd. as part of efforts to privatize the lender, Mint reported June 11, citing a person familiar with the development.

A potential sale of the government's entire stake in IDBI Bank to institutions such as state-run Life Insurance Corp. of India was one option being discussed in talks between senior bankers and the government, the source said, adding that talks are in an advanced stage.

Earlier in June, Mint reported that the government was considering selling a 51% stake in IDBI Bank to a strategic partner or private equity investors to reduce its stake to less than 50%. This was followed by a report from The Economic Times that the government was also mulling paring its stake through a preferential share issue in order to allow multiple investors to participate in the planned stake sale.

The Indian government has been trying to privatize IDBI Bank for the past two years following rising losses and bad debt. If IDBI Bank is privatized, the government would be relieved of the responsibility of recapitalizing the lender.

IDBI Bank posted a net loss after minority interest of 81.32 billion Indian rupees for the fiscal year ended March 31, compared to net loss of 50.16 billion rupees for the prior fiscal year. Its gross nonperforming assets ratio clocked in at 27.95% as of March 31, up from 24.72% at Dec. 31, 2017, and 21.25% at March 31, 2017.

The government is also considering merging IDBI Bank with other state-owned banks to enable weak lenders to divest assets, reduce overheads and shut down unprofitable branches.

As of June 12, US$1 was equivalent to 67.48 Indian rupees.