Tag: RFP

Consultant for MARS: Pension regulator comes with new RFP

Banking & Finance

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Pension regulator Pension Fund Regulatory & Development Authority (PFRDA) has come up with a new Request for Proposal (RFP) for appointment of a consultant to help design a Minimum Assured Return Scheme (MARS) under the National Pension System (NPS).

The new RFP has relaxed the eligibility criteria set earlier for a bidder and has now allowed those with experience of designing or development of atleast one scheme with guarantee for its client, to bid for the consultant role, sources close to the development said.

Former RFP

The eligibility criteria had to be tweaked as the response for the previous RFP— issued in May this year— was very tepid with only one entity showing interest, they added.

The earlier RFP mandated that a bidder, which has to be a corporate entity registered in India, should have experience of designing or development of schemes of guarantee with atleast three schemes being in operation or running in India, after being offered by its clients to the public at large. This RFP was cancelled on July 22.

MARS

The whole idea behind having MARS is to have a separate scheme that can offer a guaranteed minimum rate of return to NPS subscribers, especially those who are risk averse. Currently, the NPS gives returns annually, based on prevailing market conditions.

The appointed consultant, with requisite actuarial skills, is expected to help formulate or design a MARS that can be offered to existing and prospective subscribers by the pension funds.

The chosen consultant is also expected to set up a procedure to evaluate and approve basic scheme design modifications by the pension funds and supervise MARS. The consultant would be required to prescribe fees, solvency requirements, risk management and reporting mechanisms for pension funds in respect of MARS.

Pension funds

To enable pension funds and its sponsors to offer MARS like products, PFRDA has already tweaked the capital requirement norms for the sponsors and stipulated higher net worth and paid up capital for those looking to set up pension funds in the country. As such products carry risk, it is better to be well capitalised to take care of eventualities, experts said.

India’s pension assets under management have already crossed the ₹6 lakh crore mark and are expected to touch ₹7.5 lakh crore by end March this fiscal. PFRDA is aiming for AUM of ₹30 lakh crore by the year 2030.

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Govt extends deadline for transaction, legal advisors to bid for managing IDBI Bank sale till Jul 22, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: The government has extended the deadline for transaction and legal advisors to bid for managing the IDBI Bank strategic sale by 9 days till July 22.

The Department of Investment and Public Asset Management (DIPAM) had on June 22 invited bids from merchant bankers and law firms for managing and giving legal advice for the sale process. The last date to put in bids was July 13.

“… The competent authority has decided to extend the bid submission date of the… tender by nine days. The last date of bid submission will now be July 22, 2021,” the DIPAM said in a notice.

DIPAM, which manages government’s equity, had also clarified to the merchant bankers that LIC’s holding in IDBI Bank would be sold along with government’s stake, but the exact quantum of stake dilution would be decided later.

The central government and LIC together own more than 94 per cent equity of IDBI Bank.

LIC, currently having management control, has a 49.24 per cent stake, while the government holds 45.48 per cent in the bank. Non-promoter shareholding stands at 5.29 per cent.

The cabinet in May had approved the strategic sale of the entire stake of government and Life Insurance Corporation (LIC) in IDBI Bank.

In response to queries received from potential transaction advisors in IDBI Bank, DIPAM has clarified that since LIC’s stake would be sold along with that of the government’s, a single transaction advisor would manage the entire share sale process.

“The mandate received from CCEA is to offload up to 100 per cent stake of GoI and LIC along with transfer of management control. However, the exact quantum is yet to be worked out. It will be determined, as we go through the transaction and ascertain investors’ interest and market appetite.

“It is clarified that LIC’s stake will be sold along with GoI’s shareholding in this transaction. So there is only one transaction advisor,” it said.

The quantum of stake dilution would be declared before RFP (Request for Proposal) stage of the transaction, it added.

Finance Minister Nirmala Sitharaman in her Budget for 2021-22 had said the process of privatisation of IDBI Bank would be completed in the current fiscal. The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sale and privatisation.

Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions. Rs 75,000 crore would come as CPSE disinvestment receipts.



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IDBI Bank sell-off: Govt floats RFP for appointment of transaction and legal advisor

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The government on Tuesday floated a Request for Proposal (RFP) to appoint transaction advisor and legal advisor to assist in the strategic disinvestment of IDBI Bank.

The last date for interested parties to submit their bid is July 13 and the bid will be opened on July 14.

At present, IDBI Bank is classified as a private sector bank by the RBI with government shareholding at 45.48 per cent, Life Insurance Corporation of India shareholding at 49.24 per cent and the non-promoter shareholding at 5.29 per cent. LIC is the promoter while Centre is the co-promoter.

Also read: IDBI Bank has transformed into a retail bank: Samuel Joseph, Dy MD

The government proposes to go for strategic disinvestment along with transfer of management control. However, the extent of shareholding to be divested by the government and LIC will be decided at the time of structuring of transaction in consultation with the RBI.

Divestment target

The government has set a target of ₹1.75-lakh crore to be raised through disinvestment this fiscal, out of which ₹1-lakh crore is intended to be raised through off-loading the government stake in public sector banks and financial institutions. This also includes the stake sale in IDBI Bank. On May 5, the Cabinet Committee on Economic Affairs (CCEA) approved the strategic disinvestment of IDBI Bank.

LIC’s Board has already passed a resolution to the effect that LIC may reduce its shareholding in IDBI Bankthrough divesting its stake along with strategic stake sale envisaged by the government with an intent to relinquish management control and by taking into consideration, price, market outlook, statutory stipulation and interest of policy holders.

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