Business & Finance
Finance Minister Confirms IDBI Bank Sale Process Was Properly Conducted
Union Finance Minister Nirmala Sitharaman said on Friday that the government had followed all due process in the sale of IDBI Bank and that the bank is now ready for its next phase of growth. In a post on X, she noted that the Modi‑led government had revived IDBI Bank through professionalism, prudence and a recapitalisation of more than ₹25,000 crore.
The comments were made after Congress leader Rahul Gandhi alleged that bids for the bank were opened before a reserve price was set, a claim that followed a Business World report accusing the government of breaching its own disinvestment rules.
A Fairfax‑controlled entity bought a combined 60.72 % stake held by the government and the Life Insurance Corporation of India (LIC) for ₹52,878 crore. After the transaction, the government and LIC will retain a combined 34 % stake.
Initial bids were below the reserve price of ₹94.42 per share, prompting a fresh valuation exercise before best‑offer bids were invited. The Core Group of Secretaries on Disinvestment compared the bids with fair‑value estimates from independent valuation agencies. The winning bid of ₹81 per share exceeded the revised benchmark of ₹75.99 and both agencies’ fair‑value estimates.
The finance ministry said the process remained double‑blind: the bidder did not know the valuation, and valuers did not see the bids. The Core Group reviewed the bids and valuations to assess the offers.
A tax‑related indemnity was part of the transaction, and the discovered bid price increased by ₹3,917 crore. The ministry put the potential tax liability at ₹627 crore, describing it as a low‑probability, revenue‑neutral event.
IDBI Bank had been placed under the Reserve Bank of India’s corrective framework for stressed lenders in May 2017 and exited it in March 2021 after a capital infusion and improved financial health.
Sitharaman’s post also highlighted the ministry’s clarification that internal disinvestment practices are indicative guidelines rather than rigid rules. The Cabinet Committee on Economic Affairs had empowered the Core Group of Secretaries on Disinvestment to remove difficulties and ensure effective implementation of strategic disinvestment transactions.
The ministry also clarified that the bank was a government‑owned banking company until 2019, after which it became a government‑controlled banking company following LIC’s acquisition of 49.24 % in 2019.