Finance Ministry issues new clarification on IDBI Bank Sale Process, Read important points

The Ministry of Finance has again issued the clarifications on October 29 regarding the strategic sale of IDBI Bank. Read the important points of clarifications issued by ministry.

Increase in Transaction Value: The Ministry of Finance said that the special powers given to the Core Group of Secretaries on Disinvestment (CGD) helped increase the discovered bid price by ₹3,917 crore.

Sale of 60.72% Stake: The ministry said that the Cabinet Committee on Economic Affairs (CCEA) approved the sale of a combined 60.72% stake in IDBI Bank to Fairfax Financial Holdings for approximately ₹53,000 crore, at ₹81 per share.

No Change in Reserve Price: The ministry clarified that the reserve price was neither reduced nor increased during the disinvestment process.

Special Powers to CGD: The ministry said that the CCEA had authorised the CGD to decide the procedure for inviting revised best offers after the initial bidding round became ineffective.

Independent Valuation: The ministry said that independent valuation agencies assessed IDBI Bank’s value to help the government determine whether the bids were reasonable.

Confidential Bidding Process: The ministry said that bidders did not have access to the valuations prepared by independent agencies, while the valuers did not know the bids submitted. Only the CGD had access to both sets of information.

Revised Valuation Methodology: The ministry said that the CGD reviewed the valuation methodology in April 2026. The valuation agencies updated their assessments after the bank’s financial results for the year ended March 31, 2026, became available.

Business Valuation Method: The ministry said that the transaction adviser used the Market Multiple Method, including the Comparable Company Method, to assess IDBI Bank’s value by comparing it with listed public sector banks.

Ownership Status: The ministry said that IDBI Bank became a government-controlled banking company after LIC acquired a majority stake in 2019. Although the RBI began treating the bank as a private bank for regulatory purposes, market investors continued to value it as a public sector entity.

Protection Against Tax Liabilities: The ministry said that the government agreed to indemnify the buyer against certain disputed income tax demands to help improve the bids. It estimated the potential liability at ₹627 crore.

Stock Market Price Not Used as the Main Valuation Basis: The ministry said that IDBI Bank’s volatile share price and limited trading activity made its market price unsuitable as the primary basis for valuation.

Government and LIC to Retain Stakes: The ministry said that the government and LIC would retain their remaining shareholdings in IDBI Bank, allowing them to benefit from any future increase in the bank’s value.

Response to Questions About the Bidding Process: The ministry defended the revised bidding process, saying that the CGD had the necessary authority to review valuations, assess revised bids and decide the procedure for the best-offer round.

Government’s Position: The ministry said that the revised process helped improve the transaction value by ₹3,917 crore while allowing the government and LIC to retain stakes in IDBI Bank and potentially benefit from its future growth.

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