The government has scrapped the strategic sale of IDBI Bank as it received financial bids by potential buyers which were below the reserve price, sources said.

Prem Watsa-led Fairfax Financial Holdings and Emirates NBD put in bids but at a lower value than the minimum fixed for the sale of IDBI Bank. The floor price sought by the government was at around Rs 110 per share, sources said.

The joint sale of 60.72% by the government and the Life Insurance Corporation of India (LIC) would have fetched over Rs 70,000 crore. This would have valued IDBI Bank at Rs 1.2 lakh crore.

The government is likely to reexamine and restart the process of IDBI Bank sale. This would involve the fixation of the reserve price. The lender’s stock price has also fallen in an overall market sentiment which is down after the US-Iran war.

The reserve price for the IDBI Bank strategic sale was set by the inter-ministerial group (IMG) on disinvestment headed by secretaries in the finance ministry. This was agreed to by the core group on disinvestment, which is chaired by the Cabinet Secretary.

The government had floated an Expression of Interest (EoI) in October 2022, after the Cabinet Committee on Economic Affairs for strategic disinvestment had given an in-principle approval for privatisation of IDBI Bank in 2021. Financial bids came in on 6 February this year.

The government plans to sell 30.48% stake in IDBI Bank while LIC looks to offload 30.24% of its holding.  

In January 2023, the government said it received multiple preliminary bids. The bids were then sent for security clearance from the Ministry of Home Affairs (MHA) and a 'Fit and Proper' assessment from the Reserve Bank of India (RBI).

The shortlisted bidders who received both the clearances later on undertook due diligence of the bank.

In January 2019, LIC came to the rescue of IDBI Bank and completed the acquisition of a 51% controlling stake in the lender for approximately Rs 21,624 crore. IDBI Bank was saddled with bad loans and needed support.

Currently, the government and LIC classify as promoters of IDBI Bank. LIC is principally owned by the government with a holding of 96.5% in the insurance behemoth.

While the government owns 45.48% of IDBI Bank, LIC has 49.24% stake as of December-end 2025.