Industry

Security clearances for prospective IDBI bidders likely by October end



Security clearances for IDBI Bank’s prospective bidders could come through by the end of October, nearly 10 months after expressions of interest (EoIs) were first submitted for the bank by four parties, according to sources aware of the matter.

“Agencies have sought information to undertake criminal record checks for the prospective applicants. These take time as it involves coordination with multiple international jurisdictions. It is expected this month,” a person in the know said.

The IDBI Bank divestment lays out a two-stage security clearance requirement for bidders.

In the first stage, a security clearance is mandatory to access confidential information about the bank and carry out due diligence. In subsequent stages, once the winning bidder is decided, a second security clearance is required.

The government has formed a security committee comprising officials from the home ministry, department of investment and public asset management and external affairs ministry to coordinate the security clearances.

Fairfax, Kotak, Emirates NBD Bank and Oaktree Capital are the four parties that had submitted EoIs on January 7th, according to the sources.The Ministry of Home Affairs under whose jurisdiction the probe agencies come did not respond to ET’s queries. Fairfax, Kotak Mahindra Bank, Emirates NBD and Oaktree Capital also did not comment.The Government of India and Life Insurance Corporation of India collectively hold a 94% stake in IDBI Bank. They are selling a 60.72% stake in the bank and parting with management control. The stake they are selling is worth over $5 billion at current market prices.

The submission of EoIs is the first step of the divestment process of IDBI Bank which will be the first Indian bank to be sold through a competitive bidding process. The divestment process was kicked off by the finance ministry in October 2022 with the launch of the preliminary information memorandum document detailing the stake sale contours and bidding conditions.

As per the EoI terms, the Reserve Bank of India (RBI) also has to declare the applicant ‘fit and proper’ before it is allowed to access confidential information about the bank and start due diligence. The RBI is also in the final stages of making that assessment, as per sources cited earlier.



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