IDBI Bank stake sale: Government may consider OFS option; what is known so far

Currently, the public float in IDBI Bank is only 5.29%, which limits the scope for fair valuation.

The remaining shares are held by the insurance behemoth Life Insurance Corporation of India (LIC), which holds a controlling stake of 49.24%, while the Government of India's (GoI) holding stands at 45.48%.

What happened earlier this month?

Earlier in March 2026, the proposed sale of a 60.72% majority stake, held jointly by the government and the LIC, was scrapped after financial bids from two potential buyers reportedly fell short of the reserve price.

Low free float restricts the scope for fair market valuation, and expanding this by 10% or 15% would make price discovery more reliable, the PTI report, quoting sources, said.

It can provide a reliable benchmark for valuation and further make the price discovery process transparent, they said, adding that a strategic sale can be pursued even after one or two tranches of OFS.

As per the failed plan, both the government and LIC were to offload a 30.48% and 30.24% stake, respectively.

IDBI Bank privatisation: A look at history

This is the second time that the government has wanted to privatise IDBI Bank since the first announcement made in 2016. The idea was first officially hinted at in the Union Budget speech by then Finance Minister Arun Jaitley in February 2016.

The first attempt to privatise the then state-owned IDBI Bank failed due to valuation concerns.

However, the government later sold the controlling stake to LIC, which had been eyeing acquiring a stake in a bank to expand its bancassurance business model.

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

As a result, the bank was categorised as a private-sector bank by the Reserve Bank of India.

In December 2020, the lender was reclassified as an associate company following the reduction of LIC's stake in the bank to 49.24%.

The process for privatisation gained formal momentum when the Cabinet Committee on Economic Affairs gave its in-principle approval in May 2021 for strategic disinvestment along with the transfer of management control in IDBI Bank.

In October 2022, KPMG India was appointed as transaction advisor, and the intent to sell a 60.72% stake in the bank was announced.

The Department of Investment and Public Asset Management (DIPAM) invited Expressions of Interest (EoI) in October 2022, and market regulator SEBI approved the reclassification of GOI as a public shareholder upon completion of the sale in January 2023.

Later in August 2025, the regulator gave its nod for the reclassification of LIC as a public shareholder upon completion of the sale, and after a long due diligence period, financial bids from Emirates NBD Bank and Prem Vatsa-promoted Fairfax India were finally received in February 2026.

IDBI Bank Q3 FY26 earnings

IDBI Bank reported an almost flat profit at ₹1,935 crore for the third quarter ended December 2025 (Q3 FY26).

The LIC-controlled bank reported a net profit of ₹1,908 crore in the year-ago period.

However, the bank's total income declined to ₹8,282 crore during the quarter under review from ₹8,565 crore in the same period last year, IDBI Bank said in a regulatory filing.

The bank's interest income also fell during the third quarter of the current fiscal year to ₹7,074 crore against ₹7,816 crore a year ago.

The gross non-performing asset (NPA) ratio improved to 2.57% as of December 31, 2025, compared to 3.57% a year ago.

However, the net NPA remained static at 0.18% at the end of December 2025.

During the quarter, however, the bank's capital adequacy ratio rose to 24.63% compared to 21.98% at the end of December 2024.

On the other hand, Return on Assets (ROA) moderated to 1.83% in Q3 FY2026 compared to 1.99% for Q3 FY2025.