The Cabinet Committee on Economic Affairs gave ‘in-principle’ approval for the strategic disinvestment and transfer of management control in IDBI Bank in May 2021
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ADNAN ABIDI
With the strategic sale of IDBI Bank entering the final phase, the government is expected to factor in sale proceeds of over ₹32,000 crore in the Union Budget’s math for fiscal year 2025-26. Top Finance Ministry officials said considering all regulatory clearances are now in place, the strategic disinvestment of IDBI Bank likely to be completed soon.
Going by the current market price of the bank, the total proceeds from the stake sale could be ₹63,000 crore. As the government plans to sell 30.48 per cent of its total 45.48 per cent stake, it could get over ₹31,700 crore and, thus, would contribute a majority under the head ‘Miscellaneous Capital Receipts’ of FY26 Union Budget.
This head, replacing the term disinvestment, includes receipts on account of management of equity investments and public assets through various mechanisms. Government officials have repeatedly indicated that the divestment process will be completed in the fiscal year ending March 2026. The proceeds from the IDBI Bank sell-off are important amid apprehensions of a shortfall in the overall tax collection.
Meanwhile, post-clearance, the government is in the process of inviting financial bids for selling stakes in IDBI Bank. Completion of regulatory clearance means prospective bidders have received ‘Fit-and-Proper’ criteria from the Reserve Bank of India. Although government officials are silent on the names of prospective bidders, reports suggest ‘Kotak Mahindra Bank Ltd., Emirates NBD PJSC and Fairfax Financial Holdings Ltd. are in the race.
According to the preliminary information memorandum (PIM) for inviting an expression of interest (EOI), published on October 7, 2022, in addition to the eligibility criteria and the disqualification conditions, the interested parties (IPs) would also be subject to a ‘Fit and Proper’ assessment by RBI at the EoI stage. Only those IPs who satisfy this condition would be eligible for issuance of the RFP. Apart from the EoI stage, the ‘Successful Bidder’ would also be subject to the ‘Fit & Proper’ assessment by RBI.
The Cabinet Committee on Economic Affairs (CCEA) in its meeting on May 5, 2021 gave ‘in-principle’ approval for strategic disinvestment, along with transfer of management control in IDBI Bank Ltd. Accordingly, it was decided that the Government will offload 30.48 per cent and LIC would divest 30.24 per cent. Post-sale, the government and LIC will have 15 per cent and 19 per cent stake in the bank.
In response to the PIM, multiple Expressions of Interest (EOIs) were received. These EOIs were sent to the Home Ministry and the RBI for ‘fit and proper’ assessment. “After security clearance from MHA and fit and proper evaluation by RBI, the transaction is currently in the due diligence stage, by shortlisted bidders (SBs),” Finance Minister Nirmala Sitharaman said in a written reply on December 1 in the Lok Sabha.
She also mentioned that as per the extant process, the identity of bidders cannot be disclosed before completion of the transaction. The realisation of proceeds by the GoI and LIC is a function of the bid received and is, therefore, not known at the moment. “While deciding the terms and conditions of the strategic sale, legitimate concerns of the existing employees and other stakeholders are suitably addressed through appropriate provisions made in the Share Purchase Agreement (SPA),” she said.
Published on December 8, 2025
