IDBI Bank Sale Faces Challenges; Bids Below Reserve Price

IDBI Bank Shares in Focus as Government Cancels Strategic Disinvestment​

Shares of IDBI Bank are expected to remain in focus on Monday, March 16, after the government cancelled the proposed strategic disinvestment of the lender following financial bids that reportedly fell below the reserve price set for the transaction.

Financial Bids Fall Short of Reserve Price​

According to sources, the bids submitted for the stake sale did not meet the reserve price determined by the government. Under disinvestment rules, bids that fall below the reserve price cannot be accepted, which effectively halted the privatisation process.

The reserve price for the transaction was considered relatively high and not fully aligned with the bank’s price to book valuation. Sources also noted that the relatively low free float in the stock influenced share price movements, making the valuation benchmark more complex for the disinvestment exercise.

Bidders and Timeline of the Process​

Among the shortlisted bidders, Fairfax Financial Holdings and Emirates NBD are understood to have submitted financial bids on February 6.

Kotak Mahindra Bank, which was initially among the shortlisted bidders, had earlier indicated that it would not participate in the financial bidding stage.

The disinvestment process began on January 7, 2023, when the Department of Investment and Public Asset Management received multiple expressions of interest from potential investors.

Stake Sale Structure​

The government currently holds a 45.48 percent stake in IDBI Bank, while Life Insurance Corporation of India owns another 49.24 percent.

The proposed transaction aimed to sell a combined 60.7 percent stake in the lender. This included a 30.48 percent stake held by the government and a 30.24 percent stake held by LIC.

Under the plan, the Centre would have retained a 15 percent stake in the bank after the sale, while LIC was expected to hold 19 percent.

The government’s portion of the stake sale, representing 30.48 percent of IDBI Bank, was valued at approximately ₹30,000 crore based on prevailing market prices.

Market Reaction​

Shares of IDBI Bank settled 6.69 percent lower at ₹92.20 on Friday. The stock has declined around 11 percent so far in 2026.

The cancellation of the strategic disinvestment marks a pause in what was expected to be one of the largest banking sector privatisation transactions in India, involving the exit of controlling stakes by both the government and LIC.