IDBI Bank clarifies it has received no govt communication on scrapping of stake sale

IDBI Bank

• IDBI Bank cannot confirm or deny stake sale reports
• Stake sale process is confidential and handled by the government
• IDBI Bank shares fell 16 percent after stake sale news

Did our AI summary help?

IDBI Bank on Monday said it cannot confirm or deny reports suggesting that the proposed stake sale in the lender has been scrapped, stating that the strategic disinvestment process is confidential and being handled by the Government of India.

In a regulatory filing, the bank said it is not in a position to comment on such reports as the matter falls under the government-led strategic disinvestment process.

In a clarification, the bank said, “It is hereby clarified that the proposed Strategic Disinvestment of IDBI Bank Limited is a confidential process being undertaken by the Government of India (GOI) and, hence, IDBI Bank is not in a position to either confirm or deny the referenced news report.”

The clarification came after IDBI Bank shares fell sharply in Mumbai following reports that the government had scrapped bids for a majority stake in the lender.

The stock dropped as much as 16 percent in early Monday trading, marking its steepest intraday decline since June 2024.

According to reports by Bloomberg and Reuters, the government is likely to scrap the bids received for selling its majority stake in the bank as the offers reportedly fell short of the reserve price set for the transaction. The development would effectively halt the current sale process.

The government and Life Insurance Corporation of India had launched the strategic disinvestment process in 2022 to sell about a 60.7 percent stake in the bank.

At present, the government holds a 45.5 percent equity stake in IDBI Bank and plans to divest 30.5 percent, while LIC owns 49.2 percent and intends to offload 30.2 percent. The stake sale was expected to fetch a combined Rs 66,000 crore, according to reported estimates.

Earlier reports had said Canada-based Fairfax Financial Holdings and Emirates NBD were among the bidders for the stake sale.

According to a government source cited by Reuters, the government may consider launching a fresh sale process later if market conditions improve and stronger investor interest emerges.

The planned sale of IDBI Bank has been one of the government’s key privatisation efforts aimed at reducing state ownership in the banking sector.

Despite the setback in the disinvestment process, IDBI Bank has returned to profitability in recent years after capital support and efforts to reduce non-performing assets.

Over the past year, the stock has gained about 9.2 percent, outperforming the Nifty 50, which has risen around 3.4 percent during the same period.