Centre to allow foreign funds to own over 51% in IDBI Bank

According to a government clarification on Tuesday, the Central Government will be allowing a consortium of foreign funds and investment companies to own over 51% in state-owned IDBI Bank Ltd.

The current Reserve Bank of India (RBI) rules restrict foreign ownership in new private banks.

In reply to interested bidders' queries, the Department of Investment and Public Asset Management said the RBI's residency criteria for promoters applies only for newly set up banks and would not apply to an existing entity such as IDBI Bank.

It further said the government and the central bank would also consider relaxing the five-year lock-in period for shares if a non-banking financial company is merged into IDBI Bank.

The development come ahead of a 16 December deadline to submit expressions of interest or preliminary bids for a majority stake in IDBI Bank, one of the few lenders that the government is trying to offload its stake in.

Together, the government and the Life Insurance Corporation of India hold 94.71% in IDBI Bank and are looking to sell 60.72%.