IDBI to continue primary dealer biz even if foreign bank has majority stake

New Delhi: IDBI Bank would continue its primary dealer business even if a foreign bank acquires majority stake and management control in the private sector bank, the finance ministry said on Tuesday. As part of the primary dealer activity, IDBI Bank is involved in market making activities in respect of G-Secs, including T-bills. IDBI's treasury actively participates in primary auction of government bonds.

In response to a query on the primary dealership activities undergoing change/getting impacted, where a foreign bank acquires more than 50 per cent shareholding and management control in the strategic sale, the Department of Investment and Public Asset Management (DIPAM) said, "There may not be any impact on the primary dealer business of the IDBI Bank."

Primary dealers are RBI registered entities that buy and sell government bonds. They have the licence to buy government securities (G-secs) directly from the central bank and sell them to other buyers, thereby creating market for G-Secs. The clarification is part of the supplementary responses to queries received from interested bidders for IDBI Bank. The first set of responses were released last month.

The DIPAM had then clarified that IDBI Bank will continue to operate as an 'Indian private sector bank' after its strategic sale even if the successful bidder is a foreign bank.

The government had on October 7 invited bids for privatising IDBI Bank and said that it along with LIC will sell a total of 60.72 per cent stake in the financial institution.