The sale of IDBI Bank shares is expected to bridge part of the tax shortfall

The Cabinet Committee on Economic Affairs in May 2021 gave ‘in principle’ approval for the strategic disinvestment and transfer of management control in IDBI Bank | Photo credit: ADNAN ABIDI

Going by the bank’s current market price, the total proceeds from the sale of the shares could be ₹63,000 crore. Since the government plans to sell 30.48 per cent of its total 45.48 per cent stake, it could get more than ₹31,700 crore and thus contribute a majority under the ‘Miscellaneous Capital Receipts’ heading of the Union Budget 26.

This heading, which replaces the term disinvestment, includes receipts from the management of equity investments and public assets through various mechanisms. Government officials have repeatedly indicated that the disinvestment process will be completed in the fiscal year ending March 2026. The proceeds from the IDBI Bank sell-off are important given fears of a tax collection shortfall.

Meanwhile, post the approval, the government is in the process of inviting financial bids for sale of shares in IDBI Bank. The completion of regulatory approval means that potential bidders have received ‘Fit-and-Proper’ criteria from the Reserve Bank of India. Although government officials are keeping mum on the names of potential bidders, reports suggest that ‘Kotak Mahindra Bank Ltd., Emirates NBD PJSC and Fairfax Financial Holdings Ltd. be in the race.

As per the Preliminary Information Memorandum (PIM) for inviting Expression of Interest (EOI) issued on October 7, 2022, in addition to the eligibility criteria and disqualification conditions, the Interested Parties (IPs) would also be subjected to ‘Fit and Proper’ assessment by RBI at the EoI stage. Only the IPs that meet this condition are eligible to issue the RFP. Besides the EoI phase, the ‘Successful Bidder’ would also be subjected to ‘Fit & Proper’ assessment by RBI.

The Cabinet Committee on Economic Affairs (CCEA) in its meeting on May 5, 2021, gave ‘in principle’ approval for strategic disinvestments along with transfer of management control in IDBI Bank Ltd. Accordingly, it was decided that the government will shed 30.48 percent and LIC would shed 30.24 percent. After the sale, the government and LIC will hold 15 and 19 percent stakes in the bank, respectively.

Several Expressions of Interest (EOIs) were received as a result of the PIM. These EOIs have been sent to the Ministry of Home Affairs and the RBI for a ‘fit and proper’ assessment. “Following security clearance from MHA and assessment of suitability and propriety by RBI, the transaction is currently at the due diligence stage, by shortlisted bidders (SBs),” Finance Minister Nirmala Sitharaman said in a written reply on December 1 in the Lok Sabha.

She also said that under the existing process, the identity of bidders cannot be disclosed before the transaction is completed. The realization of the proceeds by the Indian government and LIC depends on the bid received and is therefore unknown at this time. “In determining the terms of the strategic sale, the legitimate concerns of existing employees and other stakeholders are appropriately addressed through appropriate provisions in the Share Purchase Agreement (SPA),” she said.

Published on December 8, 2025