The government is once again exploring ways to move ahead with the privatisation of IDBI Bank.
According to reports, officials are examining legal provisions that may allow bids below the reserve price to be accepted under the tender framework.
The development comes after bids submitted earlier this year by Fairfax Financial Holdings and Emirates NBD were reportedly rejected because they were lower than the government’s internal valuation.
The reserve price for the transaction has not been publicly disclosed.
Privatisation Process Had Stalled In March
The privatisation process was paused in March after the government failed to receive bids matching its valuation expectations.
Potential buyers, including Fairfax India Holdings and Emirates NBD, had submitted financial offers that reportedly fell short of the reserve price fixed by the government.
Officials are now considering whether legal provisions can be used to accept lower bids in order to complete the sale process.
The government is expected to take a decision soon as it aims to strengthen non-tax revenue collections through disinvestment.
SEBI Guidance May Also Be Sought
Reports suggest the government may also consult Securities and Exchange Board of India regarding valuation-related concerns.
One of the key issues is IDBI Bank’s very small public shareholding, which currently stands at only 5.28 percent.
Analysts believe the limited free float may affect price discovery and valuation calculations during the sale process.
The Centre currently owns 45.48 percent in IDBI Bank, while Life Insurance Corporation of India holds another 49.24 percent stake.
Together, the government and LIC control 94.72 percent ownership in the bank.
The Centre and LIC had planned to jointly sell around 60.72 percent of their combined holding in the Mumbai-based lender.
Based on current market prices, the proposed transaction was estimated to be worth nearly $6.5 billion.
The IDBI Bank sale is among the government’s biggest pending privatisation plans.
So far, the privatisation of Air India remains the most successful disinvestment completed by the government in recent years.
Other proposed stake sales, including those involving Shipping Corporation of India, BEML and Bharat Petroleum, have seen limited progress.
Disinvestment Push Continues
The plan to privatise IDBI Bank was first announced in 2016 by former Finance Minister Arun Jaitley during his Budget speech.
Finance Minister Nirmala Sitharaman recently reiterated that the government remains committed to continuing its divestment programme.
Officials believe completing large privatisation deals could help improve government finances and reduce the burden of running non-core businesses.