Modi government might divest stake in IDBI Bank via OFS
22 Mar 2026

The Indian government is considering an offer-for-sale (OFS) to increase public shareholding in IDBI Bank.

The move comes after a failed attempt to divest a majority stake in the LIC-controlled lender.

Currently, public shareholding in IDBI Bank stands at a mere 5.29%, which limits fair valuation and price discovery of the bank's shares.

LIC, GoI hold majority stake in IDBI Bank
Stake distribution

The rest of the shares are held by Life Insurance Corporation of India (LIC), which has a controlling stake of 49.24%.

The Government of India (GoI) holds the remaining 45.48% stake in IDBI Bank.

Earlier this month, a proposed sale for a 60.72% majority stake jointly held by LIC and the GoI was called off after financial bids from two potential buyers fell short of the reserve price.

Government open to pursuing strategic sale after OFS
Strategic move

The low free float has been limiting fair market valuation. However, increasing it by 10% or 15% could make price discovery more reliable.

The government is also open to pursuing a strategic sale even after one or two tranches of OFS.

This is the second time the government has tried to privatize IDBI Bank since first announcing it in 2016 under then-Finance Minister Arun Jaitley's Union Budget speech.

LIC's acquisition of IDBI Bank
Acquisition

In January 2019, LIC acquired a 51% controlling stake in IDBI Bank for ₹21,624 crore to save the lender from bad loans as part of the disinvestment process.

This led to its categorization as a private-sector bank by the Reserve Bank of India (RBI).

However, in December 2020, it was reclassified as an associate company after LIC's stake was reduced to 49.24%.

Strategic disinvestment approved in May 2021
Approval status

The privatization process gained traction when the Cabinet Committee on Economic Affairs (CCEA) approved strategic disinvestment along with transfer of management control in May 2021.

In October 2022, KPMG India was appointed as Transaction Advisor and intent to sell a 60.72% stake was announced.

The Department of Investment and Public Asset Management (DIPAM) invited Expressions of Interest (EoI) in October 2022.