As the Centre gears up to privatise banks including the IDBI Bank, it is tightening disclosure norms for bidders. Bidders will have to share the details of legal proceedings against them, if any, until the completion of sale transactions, a report in Economic Times (ET) stated.
The main idea is to seek the type of cases that the bidders are facing and the government is amending the bid document, an official told ET. The amendments will clarify which cases will disqualify the bidders from the process.
The development comes after the bidding for Pawan Hans. A company had completed the bidding process, but the transaction was halted by the National Company Law Tribunal (NCLT).
NCLT stated that the financial health of Almas Global Opportunity Fund (AGOF), the majority stakeholder in Star9 Mobility was poor. Star9 Mobility had won the bid.
AGOF had outstanding dues worth Rs 578 crore which it had to pay to EMC Ltd in return for acquiring it. This raised eyebrows about the company’s financial stability.
The Centre is reportedly cautious and does not want to jeopardise the privatisation process in later stages. It has stated that the current bidding rules require disclosure of legal proceedings, but they are now being tightened to provide more clarity.
The Cabinet Committee on Economic Affairs gave in-principle approval for strategic disinvestment and transfer of management control in IDBI Bank in May 2021.
Currently, the government holds 45.48 per cent in the bank, and Life Insurance Corporation of India, which is currently the promoter of the bank, owns 49.24 per cent.
The Centre can invite the bids for IDBI Bank soon.