IDBI Bank soars on divestment news

As part of the Budget 2020 announcement, Finance Minister Nirmala Sitharaman, announced that the government will be divesting its stakes held in IDBI Bank. The stock of IDBI bank jumped by massive 10 per cent post this news.

Government of India currently holds around 46.5 per cent stake in Industrial Development Bank of India (IDBI). With Life Insurance Corporation (LIC) holding around 51 per cent stake in the bank, IDBI Bank is classified as a private bank. The government expects to sell its entire stake to private, retail and institutional investors through stock exchanges. The government is expecting to receive a revenue of nearly Rs 2.10 lakh crore for FY20-21, out of which Rs 90,000 crore is expected from divestment of government stake in the public sector banks and financial institutions whereas, Rs 1.20 lakh crore is expected from Central Public Sector Enterprises  (CPSE) stake sale. Previously, the government approved a capital infusion of Rs 9,300 crore in IDBI Bank and later approved an additional amount of Rs 4,557 crore. LIC will also be contributing by Rs 4,743 crore towards the capital infusion in the bank.

Hence, on announcement of the divestment news, the stock of IDBI Bank on February 1, 2020 (Saturday) closed at Rs 37.30, up by 10.03 per cent or Rs 3.40 per share. The intraday high was Rs 39.85 and intraday low was Rs 33.65. The 52-week high is Rs 55.95 and 52-week low is Rs 23.55 on BSE.