DIPAM proposes to appoint consultant for disinvestment in banks, insurance companies

The Department of Investment and Public Asset Management (DIPAM), under the Finance Ministry, has floated a Request for Proposal (RFP) to appoint a consultant for advising on various modes of disinvestment of banks and insurance companies.

On October 30, in an interview to BusinessLine, Finance Minister Nirmala Sitharaman had said, “I would, probably in the later part of next year, focus on some more retail participation in ownership of banks.” Now, the step initiated by DIPAM appears to set the blueprint to achieve this. The initiative is also important as the Cabinet is expected to soon consider a policy on Public Sector Enterprises. It is proposed that in strategic sectors, at least one enterprise will remain in the public sector but private sector will also be allowed.

The Government owns 12 public sector banks and 7 insurance companies.

“The consultant is expected to be not only conversant with the subject matter but should understand, appreciate and advise on all aspects of disinvestment particularly with reference to banking and insurance sector,” the RFP said.

The responsibilities of consultant include “to assist DIAPM in formulating processes and procedures for different modes of disinvestment including strategic disinvestment with respect to banking and insurance sector that is compatible with Government rules and regulations, is transparent and capable of achieving the objective.” He/she will also assist in resolving difficulties faced by Divisional Head in carrying out disinvestment transactions while dealing with banking and insurance sector.

Job profile

According to the RFP, the job profile of the consultant will be to assist DIPAM in matters relating to management of Government equity in banks, insurance companies and financial institutions. “The consultants may be required to prepare background reports on the above sectors. He /she may be assigned other roles depending upon the requirements of DIPAM,” the RFP said.

Essential qualifications for the consultant are — MBA (Finance) or Post Graduate in Economics/Commerce, CAIIB or equivalent exam and at least 30 years of experience in banking, insurance and financial institutions. The candidate should not be more than 65 years of age. Initially, the tenure will be one year but can be extended for a maximum period of two years.

The Government has set a disinvestment target of ₹2.10 lakh crore for the current fiscal, out of which disinvestment of government stake in public sector banks and financial institutions (including LIC and IDBI Bank) is ₹90,000 crore while the remaining will come through sale of stake in Central Public Sector Enterprises. Sale of residual stake in IDBI Bank is yet to take place while pre-IPO formalities for LIC have not been completed.