BSE Building new
BSE Building newReuters file

Public sector lender IDBI Bank gained the maximum on the BSE on Monday in response to Finance Minister Arun Jaitley's announcement in the Budget 2016-17 that the government was ready to cut down its stake below 50 percent, effectively privatise the state-owned bank.

The stock was up by almost 16 percent after the announcement from its previous close of Rs 55.65 and was trading at Rs 63.40 at around 1.15 p.m., a gain of 13.9 percent.

"The government has option to reduce stake in IDBI Bank to below 50 percent," Jaitley said while presenting the Narendra Modi government's third budget on Monday.

The government currently holds about 80 percent in the bank, according to the entity's Dec. 31, 2015, filing to the stock exchanges. 

The bank had reported a net loss of Rs 2,184 crore for the quarter ended December 2015, as against a net profit of Rs 103 crore in the year-ago period.

Provisioning of Rs 3,723 crore for bad loans during the quarter dented the bank's profit, as was the case with most of the public sector banks in the third quarter as a result of the clean-up effort directed by the Reserve Bank of India (RBI) as part of its Asset Quality Review initiative.

The bank's income declined to Rs 7,361.86 crore in Q3 from Rs 7,935.99 crore in the corresponding period last fiscal, according to a regulatory filing with the stock exchanges. 

The bank's net interest margin rose to 1.96 percent from 1.83 percent.