The government’s plan to privatise IDBI Bank may get a fresh push after months of uncertainty.
According to reports, the government is exploring ways to revive the stalled sale process, including allowing the existing bidders to improve their financial offers instead of restarting the entire bidding process from scratch.
Officials believe that beginning a new sale process could take several years, making it a less practical option.
Why Did the IDBI Bank Sale Process Stop?
The privatisation process for IDBI Bank began in March 2021, but it hit a roadblock in March 2026 after financial bids were opened.
Reports suggest that the bids submitted by the two participating companies were significantly lower than the government’s expected valuation for the bank.
The government is looking to sell a 60.72% stake in IDBI Bank, including management control.
Sources indicate that the reserve price for the deal was set at around ₹90,000 crore.
Although four entities were shortlisted for the process, only two reportedly submitted final financial bids.
Fairfax Financial Holdings is believed to be one of them, though there has been no official confirmation.
Government Looking at Possible Solutions
Given the amount of time and effort already invested in the privatisation process, the government is considering all possible options to move the deal forward.
One option under discussion is allowing the existing bidders to submit revised offers with improved valuations.
Several review meetings have reportedly taken place to evaluate the situation.
However, a final decision has not yet been made.
Officials are also examining whether giving bidders another opportunity to revise their bids would be legally permissible under the existing rules.
What Is the Stake Being Sold?
The government and Life Insurance Corporation of India (LIC) are jointly selling their stake in the bank.
The proposed sale includes:
30.48% stake held by the Government of India
30.24% stake held by LIC
Transfer of management control
Together, this accounts for a 60.72% stake in IDBI Bank.
Financial bids for the sale were received by the Department of Investment and Public Asset Management (DIPAM) on February 6, 2026.
Falling Share Price Added to the Challenge
When the bids were submitted, IDBI Bank’s market value was significantly higher.
At that time, the bank had a market capitalisation of around ₹1.15 lakh crore, with shares trading near ₹107.
However, by May 29, 2026, the stock price had fallen to around ₹74, bringing the bank’s market value down to roughly ₹79,000 crore.
Market experts believe broader market weakness and global uncertainties, including tensions in West Asia, have contributed to the decline.
Government Remains Committed to Privatisation
Senior government officials have repeatedly stated that they remain committed to exiting IDBI Bank.
Although the government still owns 45.48% of the lender, the bank is effectively considered a private-sector institution because government ownership is below 51%.
Currently:
LIC holds 49.23%
Government holds 45.48%
Public shareholders hold 5.29%
The government sees the sale as an important part of its broader disinvestment strategy.
Why This Deal Matters
If the sale moves forward successfully, it could provide a major boost to the government’s financial plans for FY27.
The Centre has set a target of raising ₹80,000 crore through disinvestment and asset monetisation during the financial year.
A successful IDBI Bank stake sale would contribute significantly toward achieving that goal while marking one of the largest banking privatisation deals in recent years.
