Is IDBI A Nationalised Bank?

IDBI, which stands for the Industrial Development Bank of India, was established in 1964 by an Act of Parliament as a Development Financial Institution (DFI). Over time, IDBI’s role evolved. In 2003, the “Industrial Development Bank (Transfer of Undertaking and Repeal) Act” was passed, converting IDBI into a commercial bank. From 2004 onwards, IDBI was formally designated a scheduled commercial bank under the RBI Act.So, is IDBI a nationalised bank? The answer is no. 

Is IDBI Nationalised Bank?

1. Nationalized banks in India are commercial banks that were privately owned earlier, but were taken over (nationalized) by the Government of India (GoI) under specific legislation in 1969 and 1980. These include banks like Bank of Baroda, Punjab National Bank, etc.

2. IDBI was never nationalized under those acts of 1969-70 or 1980. It started as a DFI, later transitioned to a commercial bank, but was not part of those nationalization rounds.

3. Additionally, in recent years, a major change in ownership happened: in January 2019, the Life Insurance Corporation of India (LIC) acquired a 51% controlling stake in IDBI. Thus, while the government still has substantial stake, it is no longer a purely government-owned public sector bank.

Because of LIC’s majority control, IDBI’s classification changed for regulatory purposes; it came under the category of a “private” bank (in terms of regulatory classification), rather than being considered a Nationalised Bank.

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Let’s solve your query: Is IDBI a nationalised bank? IDBI Bank originated in 1964 as the Industrial Development Bank of India, a Development Financial Institution (DFI) under the Reserve Bank of India, later transferred to government ownership in 1976. In 2004, IDBI transformed into a banking company and obtained scheduled commercial bank status effective October 1, 2004. It merged with its bank subsidiary and other entities, reorganizing itself as IDBI Bank Ltd by May 2008.

IDBI is Nationalised Bank or Not?

From 2005, the RBI classified it among "other public sector banks." However, in June 2018, the Life Insurance Corporation of India (LIC) received regulatory approval to acquire up to 51% stake. LIC finalised its majority shareholding by January 21, 2019, obtaining a controlling interest.

Consequently, the RBI re-categorised IDBI Bank as a private sector bank for regulatory purposes from that date.

Although the Government of India remains a significant shareholder (around 45%) and LIC holds close to 49%, this ownership structure places IDBI outside the category of nationalised banks, which are those explicitly brought under government ownership by the nationalisation acts of 1969 and 1980.

Instead, IDBI now functions as a priority sector, scheduled commercial bank, operating under private sector regulatory norms.