Govt to Restart IDBI Bank Privatisation Process after First Attempt Fails

The government is planning to make a fresh attempt at selling its stake in IDBI Bank, starting the process all over again. This follows earlier reports that had claimed that the previous sale effort had been called off after the offers made by interested buyers did not meet the minimum price set by the government.

A high-level group of ministers in charge of the sale will soon be updated on where things stand and will take a final decision, but the general mood is to push ahead and begin anew, according to the Economic Times.

IDBI Bank's share price has taken a hit of around 19% since the previous sale attempt was scrapped, closing at ₹74.28 on the NSE on Tuesday, not far from its 52-week low of ₹72 recorded on April 7, 2025.

However, on Wednesday morning, the stock bounced back slightly, rising about 1.5% to ₹75.15 following news of the fresh attempt.

The government has been trying to sell off its stake in IDBI Bank for nearly five years now. This time around, it is expected to take a closer look at how the minimum acceptable price, called the reserve price, is calculated.

One concern that has been flagged is that the bank's minimum price was too heavily tied to its stock market value. Since IDBI Bank has relatively few shares available for public trading, its stock price can be more easily influenced, making it an unreliable yardstick for setting a fair minimum price.

For context, IDBI Bank had a rough decade earlier, weighed down by a mountain of bad loans. In 2019, state-owned insurer Life Insurance Corporation of India (LIC) stepped in to bail it out by acquiring a controlling stake, essentially putting the bank on government-backed life support.

In 2022, the government and LIC decided it was time to move on. They announced plans to sell a combined 60.7% stake in the bank. The government is looking to offload 30.5% of its 45.5% holding, and LIC is looking to sell 30.2% of its 49.2% stake. The deal, if it goes through, may fetch a combined ₹66,000 crore, according to reported estimates.

The sale had attracted serious interest. According to a Reuters report from February, Canada's Fairfax Financial Holdings, Dubai's Emirates NBD, and Kotak Mahindra Bank were among those who had submitted bids. However, Kotak Mahindra Bank later clarified that it had not submitted a financial bid.