India likely to announce sale of IDBI bank, stake in LIC, sources say

Punjab & Sind Bank

27/01/2021 11:52

* Govt plans 10-15% stake sale in state-owned LIC- sources
    * Plans include sales of IDBI bank, small banks and
insurance cos 
    * Govt could get up to 3 trln rupees through stake sale -
sources
    * Finance minister could announce plans in annual budget on
Feb. 1
    * 

    By Manoj Kumar and Aftab Ahmed
    NEW DELHI, Jan 27 (Reuters) - India's government plans to
announce the sale of a 10% to 15% stake in state-run Life
Insurance Corp, the country's biggest insurer, in next week's
federal budget, as part of a  privatisation push to improve
public finances, two government sources said. 
    Finance Minister Nirmala Sitharaman's plans to divest
government control of large companies such as Air India and
Bharat Petroleum Corp Ltd  BPCL.NS  failed to make much headway
in the current fiscal year because of the pandemic.
    Now the government is renewing its drive to sell stakes as
it tries to shore up revenues following the deepest economic
contraction in decades. 
    One of the sources said the government will enact changes to
a parliament law governing LIC, which has assets under
management amounting to over $400 billion.
    "To facilitate the sale of government stake in the LIC, the
government will get a parliament approval to amend the LIC Act,"
the first source said. 
    The government had announced plans to sell its stake in LIC
last year. That got delayed by legal and administrative hurdles,
the official said. 
    Sitharam will present the 2021/2022 budget on Monday. The
government also plans sales in stakes in IDBI Bank  IDBI.NS ,
Central Bank of India  CBI.NS  and Punjab & Sind Bank, a second
source said. 
    Together, the plan is to raise 2.5 trillion to 3 trillion
rupees ($34 billion to $41 billion) in the next financial year,
officials said, partly to set off the shortfall in the proceeds
this year. 
    They spoke on condition of anonymity because they are not
allowed to discuss budget plans with media.
    A finance ministry spokesman was not immediately available
for comment.
    Aiming to boost lending in the economy and improve the
valuation of state-run banks before selling stakes in them, the
government could announce creation of a bad bank, where toxic
assets of banks worth billions of dollars would be transferred,
the source said. 
    The objective is to park bad assets of state-run banks into
the proposed bad bank and later sell those assets at a
discounted price in the market, the official said.     
    "It will help clean up balance sheets of the banks and
improve their valuation."
     
($1 = 72.9122 Indian rupees)

 (Reporting by Manoj Kumar and Aftab Ahmed; editing by Larry
King)
 ((Aftab.Ahmed@thomsonreuters.com; +911149548060;))