IDBI Bank's ₹52,878 crore sale: What explains the ₹3,917 crore increase in winning bid? Centre clarifies
The government has defended the valuation process for the ₹52,878 crore sale of a 60.72% stake in IDBI Bank, clarifying that the reserve price was neither reduced nor increased during the second round of bidding. The revised process, however, helped secure a higher discovered bid price of ₹3,917 crore, according to a Finance Ministry release.
In its clarification, the government said the first round of bidding became "functus officio" after the initial bids were not approved. It added that the procedure for the second or best-offer round was determined by the Core Group of Secretaries on Disinvestment (CGD), which was empowered by the Cabinet Committee on Economic Affairs (CCEA) to address procedural issues and make necessary deviations to ensure the effective implementation of strategic transactions.
The clarification comes amid scrutiny of IDBI Bank's proposed privatisation and concerns raised by employees about reservation provisions, service conditions, and pension benefits.
The ministry said the initial bidding round was conducted in 2025-26 under the Department of Investment and Public Asset Management's (DIPAM) indicative guidelines, which allow flexibility in complex strategic transactions.
According to the government, there was no predetermined benchmark for bidding; prospective buyers independently assessed the enterprise and submitted confidential offers. Independent agencies are appointed to conduct valuations, which are subsequently used as comparators to assess whether the bids are reasonable.
The ministry said the entire valuation methodology was reviewed by the CGD in April 2026 before fresh offers were invited.
It also clarified that two independent advisers carried out valuations using separate methodologies. The business valuation used the market multiple method, with listed public-sector banks as comparable companies. The asset valuation, meanwhile, considered several factors, including disputed tax demands.
The ministry also addressed concerns over the tax-related indemnity provided as part of the transaction.
It said the potential tax liability was only ₹627 crore, whereas the discovered bid price increased by ₹3,917 crore.
The government described the possibility of such a liability arising as a low-probability event. It also said the arrangement would be revenue-neutral, as reimbursement would be applicable only if the additional tax demand was actually paid.
The Union Cabinet approved the sale to a subsidiary of Canada's Fairfax Financial Holdings on October 14.
Finance Minister Nirmala Sitharaman described the transaction as a "strategic restructuring" rather than strategic disinvestment.
Following the transaction, the government and Life Insurance Corporation of India (LIC) will retain stakes of 15% and 19%, respectively, in the bank.
Sanchari Ghosh is an Assistant Editor at Mint with over 12 years of experience in journalism, specialising in personal finance, DLT & DeFi, geopolitics and foreign policy, with a particular emphasis on how these areas intersect. <br> She writes extensively about how money works in everyday life—helping readers navigate personal finance decisions. <br> As AI reshapes investing behaviour, capital is increasingly flowing into decentralized ecosystems, redefining how assets are managed, traded, and valued. She focuses on explaining how money flows within frameworks like Distributed Ledger Technology (DLT), DeFi protocols, and crypto markets—while also exploring what the future of money could look like in a trustless, programmable financial world. <br> She also focuses on immigration-related issues, simplifying complex topics around visas, passports, overseas financial planning, and the many practical challenges Indians face while moving or living abroad. <br> Alongside personal finance, Sanchari has a strong understanding of international politics, contemporary and historical conflicts, and global state decisions. She closely tracks how geopolitical developments influence economies, markets, and individual financial choices, bringing together finance and global affairs in her reporting. <br> She began her career as a desk editor, which gave her a strong foundation in news writing. Over time, her interest naturally shifted toward personal finance. Before joining Mint in 2020, she worked DNA, The Times of India, Outlook Money, BloombergQuint, and ETMoney. At Mint, she got an opportunity to expand her coverage to include immigration and geopolitical developments while continuing to closely follow personal finance trends and market movements.As a journalist, she is committed to accuracy, intellectual rigour, and fairness. <br> She is an English Major and her work took her across cities including Delhi, Mumbai, and Pune. Living independently from an early age gave her firsthand experience in managing life and money on her own. This practical exposure sparked her strong interest in personal finance. <br> Outside the newsroom, Sanchari is a sports enthusiast who regularly plays lawn tennis and squash. In her younger years, she was also a national-level badminton player.
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