Explained — Five reasons why the IDBI Bank disinvestment process may have collapsed
Published on 16/03/2026 12:05 PM
Explained — Five reasons why the IDBI Bank disinvestment process may have collapsedThe privatization plan of IDBI Bank was approved during the Union Budget of February 2021.By Ritu Singh March 16, 2026, 12:05:21 PM IST (Published)2 Min ReadShares of IDBI Bank are trading with losses of 16% on Monday, March 16, after sources told CNBC-TV18 that the government may not proceed with the disinvestment process as the bids received for the lender are below the reserve price due to the ongoing global uncertainties.
The privatization plan of IDBI Bank was approved during the Union Budget of February 2021.
As per industry sources and feedback received from bankers, five major reasons could be attributed to the collapse of the disinvestment process. Here are some of them:
First being the fact that the reserve price quoted was too high and did not correspond to the lender's price-to-book valuation.
Second, with Kotak Mahindra Bank not participating in the deal, the buyer pool collapsed with only Emirates NBD and Fairfax left in the fray.
Third, IDBI Bank has a very low free float in the market. The government and LIC together hold 94.7% stake in the lender and that distorted the valuation benchmark. The market price of the stock therefore, could not be a reliable benchmark for the process itself.
Fourth, IDBI Bank continues to see an overhang of being a public sector bank. The buyers were pricing in the complexity of running an erstwhile state-run bank, with union contracts, legacy systems and government era culture, according to the industry sources and feedback.
Lastly, the current global uncertainties are also likely to have weighed on investor appetite and valuations with Emirates NBD, a suitor in the fray, digesting the RBL Bank acquisition as well. Emirates NBD has decided to invest over ₹27,000 crore in Mumbai-based private lender.
Shares of IDBI Bank are trading 14.4% lower on Monday at ₹78.9. The stock is already down 34% from its recent 52-week high of ₹118.Continue ReadingTagsIDBI BankIDBI Bank sharesIDBI Bank stake saleshare market today