Finance Ministry clarifies IDBI Bank strategic restructuring bidding process

What the release is about

On 29 October 2026, the Finance Ministry issued a clarification on the process of IDBI Bank Ltd’s strategic restructuring. It explains how the bidding process was run, how valuation was done and who took which decisions.

How the first bidding round worked

According to the release, DIPAM held the first or preliminary bidding process in financial year 2025-26 under its internal processes. This was in the form of indicative guidelines, not rigid rules or regulations. The preamble itself said the suggested process should not be treated as a rigid legal framework, since adjustments may be needed for timely execution of the transaction.

How bidding and valuation work

Citing the press note of 14 October 2026, the release says there are no pre-determined criteria for bidding. Bidders assess the value themselves and submit bids confidentially. Independent agencies are appointed to value the enterprise, and their assessment is used as a comparative base to judge whether bids are reasonable. So the price in a bid and the comparative valuation may be higher or lower than each other.

The rule when a bid is below the reserve price

Para 5.3.6(iii) of the RFP already provides that if the highest bidder’s financial bid is below the reserve price, the Government of India will decide the next step, and this will not be questioned later. DIPAM has no laid-down procedure for this situation; the Cabinet Committee on Economic Affairs (CCEA) has given special powers to the Core Group of Secretaries on Disinvestment (CGD) for this purpose.

The CCEA decision of 2017

At its meeting on 16 August 2017, CCEA approved a note titled ‘Procedure and mechanism for strategic disinvestment - its delegation’. It empowered CGD to resolve all difficulties, including deviations from the process, so that approved strategic disinvestment transactions could be implemented effectively. Using these powers, CGD set the process for the second or best-offer round. The release says the reserve price was neither reduced nor increased, and the first round ended on its own after the initial bids were not approved.

Review of valuation and confidentiality

Before inviting best offers, CGD reviewed the entire valuation methodology in April 2026. Since the comparative benchmark must be contemporary with the bids received, and the financial accounts for the year ended 31 March 2026 were made public at the end of April, independent agencies began revised valuations in May 2026. The process had double confidentiality: bidders did not know the valuation and valuers did not see the bids. Only CGD gets the full information.

Which valuation method was used

The release says valuation was done independently by two separate advisors using different methods. The market multiple method has two sub-types: the comparable companies method and the comparable transactions method. As suitable comparable transactions were not available, the comparable companies method was used, covering all listed public sector banks in this case. The release notes that IDBI was a government-owned banking company until 2019, and became a government-controlled banking company after LIC acquired majority stake in 2019.

The disputed tax demands

The asset valuer used well-tested methods and also added extra value for disputed tax demands, treated as a normal demand of eligible bidders. The release says potential liability on this item was only Rs 627 crore, while the bid’s reserve price rose by Rs 3,917 crore, raising the transaction value for the Government of India and LIC.

What this means for ordinary people

This release is a clarification about the bank’s sale process and its valuation. It mentions no change for ordinary depositors, account holders or banking services, so ordinary people do not need to act on it. The release also says the Government of India and LIC have retained their residual shareholding to benefit from expected value growth after the restructuring.