The Department of Investment and Public Asset Management (DIPAM) has invited bids from merchant bankers to assist in selling the government’s stake in public sector banks (PSBs) and listed financial institutions. This step is part of the government’s plan to privatize some banks and reduce its ownership in financial institutions.
Empanelment of Merchant Bankers
According to the Request for Proposal (RFP) issued by DIPAM, selected bankers will be empanelled for three years, with a possible extension of one year. These bankers will advise the government on when and how to sell its shares in select PSU banks and listed financial institutions.
The last date for merchant bankers to submit their bids is March 27, 2025. DIPAM stated that the process will follow the regulations set by SEBI, RBI, IRDAI, and stock exchanges to ensure transparency and compliance.
Eligibility Criteria for Bankers
Merchant bankers can apply for empanelment under two categories:
- Category A+: For handling transactions of ₹2,500 crore or more
- Category A: For transactions of less than ₹2,500 crore
Among the empanelled bankers, DIPAM may select one or more for a specific stake sale, depending on the need.
Responsibilities of Selected Bankers
The chosen merchant bankers will be responsible for:
- Conducting market surveys and roadshows (both domestic and international)
- Attracting potential investors, including institutions and high-net-worth individuals (HNIs)
- Arranging meetings with key stakeholders
- Highlighting the growth potential of the bank or financial institution
While the bankers will bear all expenses related to marketing and investor outreach, the government will cover travel and accommodation costs for officials involved in the process.
Background: Government’s Privatization Plan
In the 2021-22 Budget, Finance Minister Nirmala Sitharaman announced the government’s plan to privatize two public sector banks and IDBI Bank. This move is in line with the government’s broader divestment strategy to reduce its role in banking and attract private investment.
