At first, the government made it mandatory for interested buyers of IDBI Bank to provide details for security clearance from the Ministry of Home Affairs (MHA) in the first stage of the bidding process.
So far, in all instances of CPSE privatization, the government would seek details regarding the security clearance of the bidders at the second stage of the bidding process.
This meant that bidders who qualified in the first or the Expression of Interest (EoI) round, were required to seek security clearance from the government while placing their financial bids.
Inviting Expression of Interest (EoI) from bidders for buying the government and LIC’s 60.72 percent in IDBI Bank, the Department of Investment and Public Asset Management (DIPAM) said interested parties (IPs) who clear the ‘Fit & Proper’ assessment by RBI and the security clearance by the government/MHA shall be notified as the Qualified Interested Parties (QIPs).
Only the QIPs will get access to the data room of IDBI Bank for due diligence, following which they put in financial bids.
The interested parties and its directors and shareholders holding more than 10 percent, or who exercise significant influence, will have to submit a self-declaration regarding whether they are subject to preventive detention proceedings under the Public Safety Act or National Security Act, criminal investigation in which charge sheet has been filed in India or any other foreign country.
DIPAM last week invited EoIs from prospective bidders of IDBI Bank offering to sell a 60.72 percent stake together with LIC. The last date for putting in bids is December 16.
Also, interested parties and each member of the consortium would have to give a declaration or make a detailed disclosure on order/ pending investigation /proceedings by any Court/ regulatory authority/SFIO/ NCLT/ NCLAT, while submitting the EOI.
They have to certify that no investigation by a regulatory authority is pending either against them or against any associate companies, or against any of the directors, chief executive officer (CEO), or other key managerial personnel.
The clear disclosure requirement on pending investigations follows two cases of CPSE privatization which saw non-disclosure by the winning bidder regarding pending cases in the NCLT and NCLAT.
In the case of Central Electronics Ltd, the government has terminated the sale of its 100 percent stake and disqualified the successful bidder Nandlal Finance and Leasing Private Ltd.
In the case of Pawan Hans’s strategic sale also the pending NCLT case against Almas Global Opportunity Fund SPC, the lead member of the winning bidder consortium, was not disclosed at the time of putting in bids.
