The Indian government is planning to sell at least 51% of IDBI Bank Limited. Government officials and Life Insurance Corporation of India (LIC), which together own nearly 94% of the shares in IDBI Bank, are reportedly in discussions about how much of their holdings they intend to sell, according to Bloomberg. Both parties are anticipated to keep a share in the lender following the transaction.

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The ultimate decision on the deal’s framework will be made by a panel of ministers and as per Bloomberg, the government and LIC will formally attempt to measure buyer interest as early as the end of September.

IDBI Bank shares have gained 6.3% over the past year, giving the bank a market cap of around Rs 43,063.37 crore. On Wednesday, shares of IDBI surged 5.13% to Rs 41 on BSE.

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Authorities intend to sell a portion of the government and LIC holdings in IDBI Bank, as well as cede management control. According to Bloomberg, the Reserve Bank of India will enable investors to purchase stakes of more than 40%. While non-regulated companies are restricted to purchases of 10% to 15%, entities supervised by the regulator often need to get approval to purchase stakes over that level.

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Easing the criteria might broaden the pool of possible purchasers, revitalise the government’s privatisation initiatives, and strengthen its finances as it attempts to collect 650 billion rupees in disinvestments this year, according to Bloomberg. More than a third of the target amount has already been raised, mostly from the LIC’s $2.7 billion initial public offering.

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IDBI Bank’s net profit increased 25% year on year (YoY) to Rs 756 crore in the June quarter (Q1FY23). During the same period the previous year, the bank made a net profit of Rs 603 crore (Q1FY22). Its net profit increased by 10% sequentially from Rs 691 crore in Q4FY22. Net interest income (NII) for the company fell by 1% in Q1FY23 to Rs 2,488 crore, down from Rs 2,506 crore in Q1FY22. Its net interest margin (NIM) fell to 4.02% in Q1FY23 from 4.06% the previous year.