Latest News on IDBI Bank
Kotak Mahindra Bank Denies Involvement in IDBI Bank Disinvestment, Refutes Media Speculation – MSN
The Indian government’s plans to disinvest in IDBI Bank have been making headlines, with several banks and financial institutions being speculated as potential bidders. However, Kotak Mahindra Bank has come out to refute media reports suggesting its participation in the bidding process. In a statement, the bank clarified that it is not participating in the disinvestment process of IDBI Bank.
The government had announced its plans to sell a majority stake in IDBI Bank, which is currently owned by the state-owned Life Insurance Corporation of India (LIC) and the government. The move is part of the government’s broader strategy to consolidate and privatize state-owned banks. The disinvestment process is expected to attract significant interest from private sector banks and financial institutions, both domestic and international.
IDBI Bank is one of the largest public sector banks in India, with a network of over 1,800 branches and a significant presence in the corporate and retail banking segments. The bank has been struggling with high levels of non-performing assets (NPAs) and has been under pressure to improve its financial performance. The government’s decision to disinvest in the bank is seen as a move to bring in fresh capital and expertise to turn around the bank’s fortunes.
Kotak Mahindra Bank’s denial of participation in the bidding process has come as a surprise, given its reputation as one of the most aggressive and expansion-minded private sector banks in India. The bank has been actively looking to expand its presence in the Indian banking sector, and IDBI Bank’s disinvestment was seen as a potential opportunity for it to acquire a large and established bank.
Despite Kotak Mahindra Bank’s withdrawal, the disinvestment process is expected to attract significant interest from other bidders. Several other private sector banks, including Axis Bank, ICICI Bank, and HDFC Bank, are reportedly considering bidding for IDBI Bank. The government is expected to soon announce the names of the shortlisted bidders, and the disinvestment process is expected to be completed by the end of the fiscal year. The sale of IDBI Bank is expected to be a major milestone in the government’s efforts to consolidate and privatize the Indian banking sector.
IDBI Bank Disinvestment: Government Seeks Financial Bids, Expects Decision by March
The Indian government has taken a significant step towards the privatization of IDBI Bank Ltd. by formally inviting financial bids for its strategic disinvestment. This move marks a crucial milestone in the long-pending process, with the government aiming to announce the winning bidder by the end of March 2026. The Centre plans to divest a 30.48% stake in IDBI Bank, valued at around Rs 36,000 crore, while Life Insurance Corporation of India (LIC) will sell a 30.24% stake, taking the total stake on offer to 60.72% with an estimated combined valuation of nearly Rs 72,000 crore.
The disinvestment process began on January 7, 2023, when the Department of Investment and Public Asset Management (DIPAM) received multiple expressions of interest from potential bidders. Fairfax Financial, led by Prem Watsa, and Kotak Mahindra Bank are among the leading contenders for the asset. However, Emirates NBD, which had initially shown interest, is no longer considered a likely contender after announcing its intention to acquire a stake in RBL Bank.
The IDBI Bank transaction is expected to be one of the largest banking-sector privatizations in India, with both the government and LIC exiting a controlling stake. The timelines for the transaction remain contingent on regulatory clearances and bidder preparedness. The government has not set a separate target for disinvestment proceeds, which will be accounted for under the broader category of “miscellaneous capital receipts.” In the current fiscal, disinvestment proceeds have amounted to just Rs 8,768 crore.
The privatization of IDBI Bank is a significant step towards the government’s goal of reducing its stake in public sector banks. The transaction is expected to attract significant interest from investors, given the bank’s potential for growth and expansion. With the formal invitation for financial bids, the process is now expected to gain momentum, and the government is hopeful of completing the transaction by the end of the current financial year. However, the final closure of the transaction may extend beyond the current financial year, depending on the regulatory clearances and bidder preparedness.
Which Public Sector Bank is likely to emerge as the top performer in the current financial year?
The banking sector is expected to be in the spotlight as the Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points to 5.25% on December 5. This move is likely to have a significant impact on the monetary structure of the banking sector, leading to lower interest rates for consumers on loans such as home loans and car loans.
As the season of financial results declaration is underway, several public sector banks are set to release their financial results for the December-end quarter. The Bank of India, Union Bank of India, IDBI Bank, and Central Bank of India have announced the dates for the declaration of their financial results as January 21, January 14, January 17, and January 16, respectively.
However, the three largest public sector banks (PSBs) – State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda – have yet to announce the dates for the declaration of their financial results. Despite this, investors and analysts can draw some expectations from the previous quarter’s results.
The reduction in the repo rate is expected to boost the banking sector’s performance, as it will lead to lower borrowing costs for banks and increased lending to consumers and businesses. This, in turn, is likely to have a positive impact on the banks’ net interest income and profitability.
The upcoming financial results of the public sector banks will be closely watched by investors, analysts, and regulators, as they will provide insights into the impact of the RBI’s monetary policy decisions on the banking sector. The results will also provide a glimpse into the banks’ asset quality, capital adequacy, and overall financial health.
Overall, the banking sector is expected to be in focus in the coming weeks, with the financial results of public sector banks providing valuable insights into the sector’s performance and the impact of the RBI’s policy decisions. As the largest PSBs, SBI, PNB, and Bank of Baroda, are yet to announce their results, their declarations will be closely watched by the market.
India Plans to Consolidate State-Run Banks in Next Phase of Mergers, Aiming to Create Lenders of Global Proportions
The Government of India is preparing for the next round of consolidation of public sector banks (PSU banks) with the goal of creating large, globally competitive lenders. The aim is to support India’s long-term economic ambitions and achieve the vision of a developed India by 2047. Finance Minister Nirmala Sitharaman has emphasized the need for several large, world-class banks to raise capital, compete globally, and finance large infrastructure and development projects.
Currently, India has 12 public sector banks, with the State Bank of India (SBI) being the largest, ranking 43rd among the world’s top 50 banks. PSU banks account for nearly 60% of the country’s total banking business, making them strategically important in India’s financial system. The government is considering merging small and mid-sized PSU banks with larger lenders, with banks such as Indian Overseas Bank, UCO Bank, and Bank of Maharashtra potentially being merged with larger banks like SBI, Punjab National Bank, or Bank of Baroda.
This is not the first round of consolidation in the Indian banking sector. Since 2017, the number of PSU banks has decreased from 27 to 12 through a series of mergers. Key mergers include the merger of United Bank of India and Oriental Bank of Commerce with Punjab National Bank, and the merger of Dena Bank and Vijaya Bank with Bank of Baroda. SBI has also absorbed five associate banks and Bharatiya Mahila Bank, expanding its balance sheet and branch network.
In addition to consolidation, the government is also progressing with the strategic disinvestment of IDBI Bank. The Department of Investment and Public Asset Management (DIPAM) Secretary has indicated that the transaction is expected to be completed by March 2026. The government had sold a 51% stake in IDBI Bank to LIC in 2019, and the remaining stake is now slated for sale to private investors. The goal of these efforts is to create a stronger and more competitive banking sector that can support India’s economic growth and development.
India’s Government Eyes $7 Billion Stake Sale in IDBI Bank, with Kotak Mahindra Bank Emerging as a Leading Contender in the Intense Bidding Process
The Indian government is set to take a significant step towards privatizing IDBI Bank Ltd. by inviting bids for its majority stake, valued at $7.1 billion. This move is part of the government’s broader divestment strategy, which aims to reduce its stake in various public sector enterprises. The plan to privatize IDBI Bank has been in the works for some time, and the government is now moving forward with the process.
According to reports, discussions with potential bidders are already at an advanced stage, and a government agency may formally launch the bidding process as early as this month. This would make it one of the largest state-backed bank stake sales in decades. The sale of IDBI Bank’s majority stake is expected to attract significant interest from both domestic and foreign investors, given the bank’s large customer base and extensive network of branches.
The privatization of IDBI Bank is seen as a key component of the government’s plan to reduce its stake in public sector banks and raise revenue. The government has set an ambitious target of raising $28 billion through divestment in the current fiscal year, and the sale of IDBI Bank’s stake is expected to contribute significantly to this target.
The privatization of IDBI Bank is also expected to lead to improvements in the bank’s efficiency and competitiveness, as private sector ownership is likely to bring in new management and operating practices. The bank has been struggling with high levels of non-performing assets and low profitability in recent years, and privatization is seen as a way to turn around its fortunes.
Overall, the sale of IDBI Bank’s majority stake is a significant development in India’s banking sector and is expected to have far-reaching implications for the country’s financial landscape. The government’s decision to privatize the bank is a key step towards achieving its goal of reducing its stake in public sector enterprises and promoting private sector participation in the economy. With the bidding process expected to launch soon, all eyes will be on the sale of IDBI Bank’s stake, which is set to be one of the biggest state-backed bank stake sales in decades.
Stock Market Updates of IDBI Bank
Recent Updates
Financial strain and deteriorating loan portfolios threaten the stability of small microfinance institutions
India’s microfinance sector is facing a severe crisis, with at least half a dozen companies defaulting on bank loans due to asset quality stress and funding crunch. These companies, including VFS Capital, Navachetana Microfin Services, and Arth Finance, are struggling to survive due to a liquidity crunch and difficulties in operating without institutional funding support. The sector’s stress began building in April last year, after a brief revival from the pandemic, and has resulted in a significant increase in late-stage portfolios at risk, with a surge to 15.32% at the end of the September quarter.
The micro-loan market has contracted to ₹3.46 lakh crore, registering a 17% year-on-year drop, with a near 20% fall in the number of active loans to 132 million. Listed microfinance firms, such as Fusion Finance and Spandana Sphoorty Financial, have suffered net losses in the second quarter, extending the run of negative earnings they reported over the past several quarters. Mainstream lenders, including Bandhan Bank, IndusInd Bank, IDFC First Bank, and RBL Bank, have also encountered profitability hits due to the stress in their microfinance portfolios.
VFS Capital, which has a cumulative exposure of ₹143 crore toward five lenders, failed to meet its repayment commitments, with a total overdue amount of ₹82 crore. The company had applied for a small finance bank licence from the Reserve Bank of India (RBI) in January but withdrew it last month after its financial condition worsened. Other affected lenders, including Bank of Maharashtra and IDBI Bank, have told VFS to submit financial statements and a certified book debt statement for the quarters ended June and September.
The situation is similar for Navachetana Microfin Services, which has delayed debt servicing since April and submitted a debt restructuring plan to lenders with the proposal to repay the dues in the next seven years. Some of the company’s loans from banks have already turned into non-performing assets (NPAs) by legal definition. Lenders to these entities have suggested forensic audits to determine the cause of the default and to consider restructuring of bank accounts.
Sectoral leaders are calling for financial institutions to become more lenient while lending to smaller microfinance entities and are expecting the government to consider a proposal to provide a guarantee fund for the microfinance sector. Without institutional funding, several other small lenders are likely to be on the brink of default very soon. The government guarantee programme can facilitate lending to these entities and help them overcome the current liquidity crisis.
Kotak Bank finalizes assessment of IDBI acquisition.
Kotak Mahindra Bank has reportedly completed its due diligence process to acquire the government’s stake in IDBI Bank, making it a strong contender in the race to take over the bank. The due diligence process involved reviewing confidential information such as borrower data, exposure, and loan provisions to assess the bank’s financial health. With Kotak Mahindra Bank’s entry, the competition becomes more interesting, as two global players, Oaktree Capital Management and Fairfax Financial, have already completed their due diligence.
Fairfax Financial already owns a 40% stake in CSB Bank, while Emirates NBD may no longer be in the race after its recent acquisition of RBL Bank. Kotak Mahindra Bank could become the front runner in the race for IDBI Bank, as it is the only domestic contender to buy the government’s stake. The government and Life Insurance Corporation (LIC) hold 94% in the bank, and the transaction could involve acquiring a majority stake of up to 60.72%.
The government aims to finalize the winning bidder by the end of FY26, with the deal potentially valuing IDBI Bank around $8-10 billion. The bank is in advanced discussions with government-appointed advisers, and final financial bids are expected to be invited in the coming quarter. The government first announced its intent to divest IDBI Bank in February 2021, and the formal process began in October 2022, when the Department of Investment and Public Asset Management (DIPAM) invited expressions of interest (EoIs) for the bank’s strategic sale.
By January 2023, DIPAM confirmed it had received multiple EoIs, and around September, four shortlisted bidders who cleared the Reserve Bank of India’s ‘fit and proper’ assessment were granted access to the data room, initiating the buyer due diligence phase. Kotak Mahindra Bank’s spokesperson declined to comment on the development, stating that they would revert with an update if any. The acquisition of IDBI Bank is expected to be a significant deal, and the government is keen to finalize the process by the end of FY26.
Consolidating banking entities to the point of rendering them obsolete
The Indian government’s plan to merge nine public sector banks into three large banks, namely State Bank of India, Punjab National Bank, and Canara Bank, has sparked concern among customers and employees. The move, aimed at enabling these banks to compete with foreign banks, is expected to begin by the end of the next financial year. However, this merger could have far-reaching consequences, including making banking inaccessible to common people, increasing workload, and worsening bank environments.
Bank mergers are not new in India, with several state banks having merged with SBI in the past. Recently, Andhra Bank and Corporation Bank merged with Union Bank, while Dena and Vijaya Banks merged with Bank of Baroda. The real objective behind these mergers was to shift the liability of banks in debt from giving loans to billionaires. Apart from mergers, the privatization of banks is also underway, with IDBI Bank being privatized and Yes Bank being taken over by Japan’s Sumitomo Mitsui Banking Corporation.
The central government’s move to privatize and merge public sector banks has been criticized for forgetting the role that these banks played in keeping the country safe during the global financial crisis. Big banks have no interest in ordinary, rural, and farmer accounts, and have recently imposed minimum balance requirements, making it difficult for ordinary people to access banking services. This could lead to a shift from mass banking to class banking, where only the wealthy have access to banking services.
The merger is expected to lead to widespread closure of branches, voluntary retirement, and compulsory retirement, which will adversely affect services. Customers will be forced to accept unilaterally imposed service charges and penalties. The banking sector is heading from nationalization to privatization and eventually to foreignization, which will have adverse effects on the economy and common people. The government’s move has been criticized for being anti-poor, as it will only benefit the wealthy and large corporations.
The privatization of banks will also lead to a loss of benefits that society achieved through nationalization of banks. Small borrowers are being tied up with laws like SARFAESI, while corporate loans worth crores continue to be written off. The decline in the number of banks will also adversely affect services, and customers will be forced to accept poor services and high charges. The government’s move has been criticized for being a shift from pro-people policies to pro-corporate policies, which will have far-reaching consequences for the economy and common people.