IDBI Bank shares fall 15% after sources say disinvestment move may not proceed

Shares of IDBI Bank Ltd. opened as much as 12% lower on Monday, March 16, after the government cancelled the strategic disinvestment of the lender. Sources told CNBC-TV18 that the financial bids received for the stake sale were below the reserve price set for the transaction.

Under the disinvestment rules, the government may not be able to accept bids that fall short of the reserve price, which could stall the privatisation process.

According to sources, the reserve price for the stake sale was considered too high and was not in line with the bank's price-to-book valuation. They added that the relatively low free float in the stock also influenced share price movement, complicating the valuation benchmark used for the disinvestment.

Among the shortlisted bidders, Fairfax Financial Holdings and Emirates NBD are understood to have submitted financial bids on February 6.

Kotak Mahindra Bank, which was also among the shortlisted bidders, had earlier indicated that it would not participate in the financial bidding process.

The Centre currently holds a 45.48% stake in IDBI Bank, while Life Insurance Corporation of India (LIC) owns another 49.24%.

The government had planned to sell a combined 60.7% stake in IDBI Bank, comprising 30.48% held by the Centre and 30.24% held by LIC. After the divestment, the Centre was expected to retain a 15% stake, while LIC would hold 19%.

As part of the proposed transaction, the government intended to divest its 30.48% stake in IDBI Bank, valued at roughly ₹30,000 crore at current market prices.

The disinvestment process has been underway since January 7, 2023, when the Department of Investment and Public Asset Management (DIPAM) received multiple expressions of interest from potential bidders.

With both the government and LIC planning to exit their controlling stakes, the IDBI Bank deal was expected to be one of the largest banking-sector privatisations in India.

Shares of IDBI Bank settled 6.69% lower on Friday at ₹92.20. The stock has declined 11% so far in 2026.