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Informist, Friday, Sept. 25, 2026

NEW DELHI – The proposed strategic disinvestment of IDBI Bank is moving at a steady pace, a senior finance ministry official said. Without revealing any details about the stake sale, the official said the government was evaluating the financial bids submitted by the interested investors.

The strategic disinvestment of IDBI Bank was first announced in the Union Budget for 2021-22 (Apr-Mar), followed by in-principle approval from the Cabinet Committee on Economic Affairs in May 2021. Subsequently, the government had invited expressions of interest to sell its 30.48% stake and Life Insurance Corp. of India's 30.24% stake in IDBI Bank in October 2022.

Following the initial bids, interested investors conducted due diligence and the security clearance was obtained from the Ministry of Home Affairs. However, the strategic sale moved at a lacklustre pace thereafter, with then divestment secretary Tuhin Kanta Pandey pointing out that the Reserve Bank of India should have expedited the evaluation of prospective investors for IDBI Bank to facilitate the proposed privatisation sooner.

Since then, there has been slow progress around the government's possibly most-touted privatisation. In FY26, however, the government worked towards privatising the bank, internally setting a deadline of March to conclude the deal. It sought financial bids in February, which were below the reserve price set for the transaction.

The reserve price is the minimum price sought to carry out a transaction involving sale of shares. This development meant that the government had to re-draw the privatisation plan for the bank and repeat the entire process.

In March, Informist had reported that Canada's Fairfax Financial and the UAE's Emirates NDB had submitted bids. Both suitors have experience operating in Indian banking sector, with Emirates NDB recently acquiring RBL Bank and Fairfax Financial already holding 40% stake in the private sector lender CSB Bank. Earlier, Kotak Mahindra Bank was the preferred suitor to acquire the stake in IDBI Bank, but it had informed exchanges on Feb. 7 that it had not submitted a financial bid.

IDBI Bank was formally classified as a private sector bank by RBI after LIC paid INR 216.24 billion to government for 51% stake in IDBI Bank in FY19. The life insurance behemoth had invested INR 47.43 billion more in September 2019 while 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 qualified institutional placement route in December 2020, after which government shareholding in IDBI Bank fell to 45.48% and LIC's fell to 49.24%.

At the time, the government was criticised for seemingly forcing the life insurer into bailing out the beleaguered bank, which was one of the 11 public sector banks to be put under the RBI's prompt corrective action framework for high bad loans. With more than a quarter of its loan book classified as non-performing assets, IDBI Bank had posted a combined net loss of more than INR 170 billion from FY16 to FY18. The government then started looking for ways to improve IDBI Bank's performance and governance. After multiple round of deliberations, the government allowed LIC to buy a controlling 51% stake in the bank.

Though IDBI Bank is already categorised as a private sector bank by RBI, the strategic sale is expected to lay down a roadmap for future privatisation of other public sector banks. After the proposed strategic sale, the shareholdings of the government and LIC in IDBI Bank will fall to 15% and 19%, respectively. This is the largest strategic sale by the government since the divestment of Air India Ltd. in 2022. The government had called off the strategic divestment of Bharat Petroleum Corp. Ltd. in 2022 after some potential buyers backed out.

At 1046 IST, shares of IDBI Bank traded 1.4% higher from the previous close at INR 83.73 on the National Stock Exchange. At the current share price, the government may raise nearly INR 270 billion from the strategic sale of IDBI Bank.  End

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

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

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