Interview. ₹65,000-cr disinvestment target realistic; govt moving towards it: DIPAM Secretary Tuhin Kanta Pandey

The unique thing is about doing a bank disinvestment on the basis of competitive bidding. Largely, there have been mergers among Central public sector banks. Then banks that went into distress were handled by RBI under the Banking Regulation Act in its unique way, because ... the bank has to be saved and things have to be done very urgently.

But, in this case, we have some equity and we want to pass on the management control. So, open bidding process is being adopted. Secondly, banking is a heavily regulated entity by the RBI. We are upfront informing that you will be tested for fitness by RBI. Then there are more conditions. We have brought in a vary transparent process after detailed discussions with RBI.

We have to be realistic in the way the process will run. As this is the process through competitive bidding for a bank, we will wait for the bidders’ responses, and subsequently, how they view it, how much time will it take for due diligence. Our expectation is that financial bids maybe possible before March.

We have not taken a final view. One of the factors was that it is under challenge in an appellate court. And we’re taking time to see what the appellate court has to say on the matter.

As far as IPOs are concerned, we did not have many candidates. We did LIC IPO; now WAPCOS has filed DRHP. Small sized IPOs could be possible going forward this year.

Given our overall policy of keeping in mind the value of the company as well as taking care of the minority stakeholders, we do OFS at the appropriate time in selected cases.

We have appointed advisors. Road shows are on. We will see how it goes. (In the case of BALCO) There are certain court cases. Also, it is not a listed entity yet. We have to deal with the BALCO case given the situation in the litigation side, and the Ministry of Mines is looking into it.

Normally, we bring at least one tranche every year where we add on to the ladder structure. And in between the period, we allow the product to deepen through the markets. AUMs have gone much ahead than the total amount raised through the NFO. This means there has been a greater amount of activity, which was indeed the objective that deepening should take place through a market. That objective is getting fulfilled. We have done three branches so far, but in parallel, a number of other ETFs have come in the private sector. We might see a tranche in December.

I would not say it is a conservative target because targets are dependent on how much is left out as an equity. We have to understand that once we divest an equity, it is permanently encashed. We did have substantial disinvestment since 2014, and during that period, about ₹4-lakh crore was raised through disinvestment. It always leads to lower and lower potential going forward.

If you really look at it, even ₹65,000 crore is realistic, and the government is moving towards it. Now, we are in a relatively more difficult era of strategic disinvestment because in many of the large companies, a substantial amount of equity has been diluted. And we have to also keep in mind the interest of minority shareholders and release further equity in a collaborative manner.

So, disinvestments going forward will largely come through actual implementation of new PSE policy. That means strategic disinvestment and such processes are time-taking and also more difficult because they involve change of management control. Therefore, we have to be realistic in terms of what we can achieve.

We have to keep in mind that strategic disinvestment is not always like a tap or is as smooth as that. There are bidders involved. There’s also due diligence and it was impacted due to Covid during the last two years. There are other things like the Ukraine crisis for example, that pose challenges. We also have to also go in a calibrated fashion, but we have to go for realistic targets and try and achieve.