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.