Private sector lender Kotak Mahindra Bank is considering acquiring a majority stake in IDBI Bankreported the Hindu business line citing unnamed sources

Kotak Mahindra Bank MD & CEO and promoter Uday Kotak is believed to have shown interest in IDBI Bank, the sources said. 

The Government of India and the Life Insurance Corporation of India (LIC) are looking to divest a 60.72% stake in IDBI Bank.

It was not immediately known whether IDBI Bank will become a part of Kotak Mahindra Bank or continue to operate as an independent entity.

“Given the present shareholding of IDBI Bank, it may be retained as an associate to Kotak Bank at least for the initial four–five years after the stake acquisition,” another source was quoted by the publication as saying.

In March 2020, the Reserve Bank of India (RBI) granted the State Bank of India permission to hold its 40% interest in Yes Bank as an associate company, perhaps setting the standard for such structures.

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An email sent to Kotak Mahindra Bank did not elicit a response. 

Following the strategic divestiture, the government and LIC would hold 15% and 19% of IDBI Bank, respectively.

As per the report, financial bids are expected to begin in September, and the stake sale for IDBI Bank is anticipated to be finalised this year.

Last month, the Economic Times reported that Dutch banking group ING could re-enter the Indian market by buying a stake in IDBI Bank.

Other entities such as Sumitomo Mitsui Banking Corporation Group, Oaktree Capital Management  Emirates NBD and Fairfax Group have reportedly submitted an expression of interest (EoI) for IDBI Bank.