The Government of India has issued a clarification on the strategic restructuring and disinvestment process of IDBI Bank Ltd., explaining the bidding procedure, valuation methodology and decisions taken during the second round of bidding.
According to a Press Information Bureau (PIB) release dated October 29, 2026, the Department of Investment and Public Asset Management (DIPAM) conducted the initial bidding round during the financial year 2025-26. The government stated that the process followed indicative guidelines that allow flexibility in complex strategic transactions.
Government Explains Two-Round Bidding Process
- The government clarified that there was no predetermined benchmark price for the bids. Qualified bidders independently assessed the bank’s value and submitted confidential financial offers.
- Independent valuation agencies were appointed to assess the bank’s fair value, which was then compared with the bids received. The government explained that the bid price and independent valuation could differ, as they were calculated using separate approaches.
- The Request for Proposal (RFP) also provides for situations in which the highest financial bid falls below the reserve price. In such cases, the government decides the next course of action.
Core Group of Secretaries Determined the Next Steps
- According to the clarification, the Cabinet Committee on Economic Affairs (CCEA), in its meeting on August 16, 2017, empowered the Core Group of Secretaries on Disinvestment (CGD) to address procedural difficulties and consider deviations where necessary for effective implementation of approved strategic disinvestment transactions.
- The government stated that the CGD determined the procedure for the second round, known as the best offer round, after the initial bids were not approved.
- It also clarified that the reserve price was neither increased nor decreased and that the initial round was treated as concluded.
Independent Valuation Reviewed in 2026
- The government said the CGD reviewed the valuation methodology in April 2026 before inviting best offer bids.
- Revised valuations began in May 2026 after the financial accounts for the year ended March 31, 2026, became publicly available in late April.
- The process was described as a “double blind” exercise: bidders did not know the independent valuation, while valuers did not have access to the bids. The CGD reviewed both sets of information to assess whether the offers were reasonable.
- Two independent advisers used separate valuation methodologies. The business valuation included a market multiple approach based on comparable listed public sector banks, as suitable comparable transactions were unavailable.
Government Explains Tax Liability and Higher Bid Value
- The clarification also addressed the treatment of disputed tax demands in the asset valuation.
- According to the government, a potential liability of ₹627 crore was considered in connection with disputed tax demands, with reimbursement applicable only if the additional tax demand was actually paid, subject to the relevant arrangements.
- The government stated that the bid discovered price increased by ₹3,917 crore, which it said enhanced the transaction’s value for the Government of India and the Life Insurance Corporation of India (LIC).
Government and LIC to Retain Residual Stakes
- The government also explained why IDBI Bank’s volatile stock price was not used as the basis for valuation, referring to its earlier press note dated October 14, 2026.
- It stated that the Government of India and LIC would retain residual shareholdings, allowing them to benefit from any future increase in value following the bank’s strategic restructuring.
Conclusion
The government’s clarification seeks to explain the procedural flexibility, independent valuation safeguards and decision-making arrangements behind the IDBI Bank disinvestment process. It maintains that the second bidding round followed the authority delegated to the CGD and that the revised valuation exercise was designed to assess the reasonableness of the offers received.
