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Informist, Thursday, Feb. 5, 2026

 

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--Govt source: IOB shr sale, asset monetisation to help meet FY26 divest aim
--Govt source: To sell 4% in Indian Overseas Bank via QIP to meet divest aim
--Govt source: To complete IDBI Bank privatisation in FY27
--Govt source: Govt may dilute some stake in LIC in FY27 
--Govt source: Aim to offload 6% stake in LIC in next 2 years
--Govt source on LIC stake sale: Finalising offer size, tranches with SEBI
 

 

By Krity Ambey, Sagar Sen, and Priyasmita Dutta

 

NEW DELHI – With the privatisation of IDBI Bank unlikely to be completed in the current financial year, the government is counting on selling a 4% stake in Indian Overseas Bank and asset monetisation to meet its miscellaneous capital receipts target of INR 338.37 billion for the year, according to three finance ministry officials. Finance Minister Nirmala Sitharaman has given an extension of a few months to the Department of Investment and Public Asset Management and the Department of Financial Services to conclude the strategic disinvestment of IDBI Bank, one of the officials said.

 

So far in 2025–26 (Apr–Mar), the government has raised INR 87.68 billion through sales of minor stakes in public sector undertakings and INR 188.37 billion through asset monetisation. This leaves a gap of INR 62.36 billion to be bridged in the final two months of the year. The government, which currently holds 92.4% stake in Indian Overseas Bank, aims to trim it to 88% through a qualified institutional placement. Based on the bank's share price for Wednesday, the minor stake sale in the bank could fetch the government around INR 25 billion. At 1431 IST, the shares of Indian Overseas Bank were trading 0.7% lower at INR 34.90 on the National Stock Exchange.

 

The balance is expected to come from asset monetisation. Under asset monetisation, the government unlocks value from the non-core assets of central public sector enterprises by leasing or concessioning them to the private sector. The framework also allows the public sector units to issue infrastructure investment trusts and brings in private participation in public sector projects, while the government retains ownership of the underlying assets. Following the success of the four-year asset monetisation plan launched in FY22--which raised over INR 4 trillion--Sitharaman announced a new five-year plan in FY26 to raise INR 10 trillion.

 

The strategic divestment of IDBI Bank, meanwhile, is now expected to conclude in the next financial year. As per the share price Wednesday, this single transaction could help the government raise nearly INR 340 billion--more than the entire miscellaneous capital receipts target for FY26. If the government had completed the sale of IDBI Bank in the current financial year, it would have overachieved its miscellaneous capital receipts target. At 1432 IST, shares of IDBI Bank were trading 6.5% lower at INR 102.68 on NSE.

 

Under the privatisation plan, the government will divest its 30.48% stake in IDBI Bank, along with Life Insurance Corp. of India's 30.24% holding. The prospect of a large, one-time inflow from IDBI Bank's privatisation appears to have encouraged the government to set an ambitious miscellaneous capital receipts target of INR 800 billion for FY27.

 

Besides the privatisation of IDBI Bank, the government is also counting on further dilution of its stake in LIC to meet the ambitious target for FY27. It aims to reduce its holding in the insurer by 6% over the next two years. Discussions are underway between the government, LIC, and the Securities and Exchange Board of India to determine the number of tranches and the appropriate size of stake sale for each tranche, a second official said.

 

As per the share price Wednesday, offloading just 1% of the government's stake in the insurance behemoth could raise up to INR 50 billion. The government had sold a 3.5% stake in the insurer through an initial public offering in FY23, raising INR 205.16 billion. At 1433 IST, shares of LIC were trading 0.02% lower at INR 834.65 on NSE.

 

Having met its divestment target only twice in the past decade, the government now appears to be stepping up its efforts. Sitharaman has said that divestment receipts will play a key role in future fiscal consolidation, adding that the ministry will actively pursue higher public shareholding in state-owned companies this year. The Department of Economic Affairs has set August 2026 as the deadline for public sector companies to raise their public float to 25% to comply with SEBI's minimum public shareholding norms.  End

 

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

 

Edited by Ashish Shirke

 

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