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Informist, Monday, Mar. 9, 2026

 

--Govt official: W Asia war forces govt to re-prioritise IDBI Bk divestment

--Govt official: Got bids from Fairfax Fincl, Emirates NDB for IDBI Bk stake

--Govt official: Want to get IDBI Bank divest timing right to optimise value

--Govt official: IDBI Bank privatisation will be carried out in FY27

--Govt official: To take calibrated steps for IDBI Bk divest as mkt volatile

 

By Priyasmita Dutta

 

NEW DELHI – Rising tensions in West Asia have led the finance ministry to re-prioritise its focus areas, pushing down IDBI Bank privatisation lower in the pecking order at the moment, a senior official said. The moderation in the pace of progress in undertaking the transaction is also due to the current volatility in the stock market, as the government seeks to get the best value for its stake sale in the bank, the official told Informist.

 

According to the official, while the West Asia war has diverted the government's focus to more pressing issues for now, IDBI Bank privatisation will be carried out in FY27. The government has set an ambitious miscellaneous capital receipts target of INR 800 billion for FY27, more than double the target of INR 338.37 billion for this year. The IDBI Bank stake sale will help the government in inching towards the disinvestment target for the next fiscal year.

 

"IDBI Bank is a strong bank, and the transaction will be beneficial for the investor, so it is important to get the timing right," the official said. "It will also pave the way for future bank privatisation, so a good valuation will help set the right example," the official added. IDBI Bank had reported a net profit of INR 19.35 billion for the December quarter and total income of INR 82.82 billion. 

 

According to two finance ministry officials, Canada's Fairfax Financial and the UAE's Emirates NDB have submitted bids to buy the government's 30.48% stake and the Life Insurance Corp. of India's 30.24% stake in IDBI Bank. Both the suitors have experience in acquiring banks in the Indian banking sector, with Emirates NDB recently acquiring RBL Bank and Fairfax Financial already holding 40% stake in the old private sector lender CSB Bank.

 

Earlier, Kotak Mahindra Bank was the preferred suitor to acquire the stake in IDBI Bank, but the slow pace of progress and the extension granted from the government's top bosses to close the deal by Mar. 31, 2027 instead of Mar. 31 this year nudged the private sector lender to pull out of the race, according to the first finance ministry official. The bank had informed exchanges on Feb. 7 that it had not submitted a financial bid.

 

The government was keen to conclude the sale of IDBI Bank in the current financial year, as it would have benefited from the sale proceeds. Since the time of seeking initial bids from interested investors in October 2022, the share price of IDBI Bank has more than doubled to INR 108.9 as on Friday. However, the share price has fluctuated since the armed conflict broke out in West Asia on Feb. 28. IDBI Bank's stock price fell 6% during the period. At 1335 IST, shares of the bank were trading at INR 102.80 on the National Stock Exchange, down 5.7% from the previous close.

 

"The government is unsure what the trajectory of the conflict will be and how markets will further react," the official said. "With a year's extension to conclude the deal, the government will take a calibrated approach." 

 

India faces fresh geopolitical risks after Israel and the US launched joint military strikes on Iran on Feb. 28, prompting retaliation from Tehran. Iran's Supreme Leader, Ayatollah Ali Hosseini Khamenei, and several of the country's top military leaders were killed in the first wave of attacks by Israel and the US. Iran has since retaliated against Israel and also targeted US military installations around the Persian Gulf.

 

Iran has also shut the Strait of Hormuz, a narrow waterway that connects the Persian Gulf to the Indian Ocean, resulting in a sharp jump in prices of crude oil and natural gas. A fifth of the global crude oil supply flows through the Strait of Hormuz. The May Brent Crude futures contract has risen over 23% since the conflict broke out.

 

The geopolitical uncertainty has weighed on the market, with the Nifty Bank settling at 57783.25 points on Friday, down 4.5% on week. This compared to a 2.9?ll in the Nifty 50 last week. Overall, market volatility is expected to remain elevated until clarity emerges on how long the military conflict in West Asia will continue.

 

At the current share price, the government will get INR 357 billion from the sale of its 30.48% stake in IDBI Bank, while LIC will get INR 354 billion from the sale of its 30.24% stake.

 

The government had invited expression of interest to sell its 30.48% stake and LIC's 30.24% stake in IDBI Bank in October 2022. Currently, the government holds 45.48% stake in the bank, and LIC, the promoter, holds 49.24%. After the proposed strategic sale, the government's stake will come down to 15%, and LIC will hold 19% in the bank. If IDBI Bank is privatised, it will be only the second strategic disinvestment the government has succeeded in after Air India.

 

LIC had paid INR 216.24 billion in FY19 to acquire 51% stake in IDBI Bank. The life insurer had invested another INR 47.43 billion in September 2019, and the government had infused INR 45.57 billion, after which LIC continued to hold 51% stake in the bank. IDBI Bank had raised equity capital to the tune of INR 14.35 billion through the qualified institutional placement route in December 2020, after which the government's shareholding in IDBI Bank fell to 45.48%, and LIC's shareholding dropped to 49.24%.  End

 

US$1 = INR 92.33

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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