Shares of IDBI Bank on Monday slumped 16.5% to close at Rs 77 on the BSE after the government reportedly shelved the plan to sell a majority stake in the lender as it failed to secure a suitable price, with the bidders offering valuations below the reserve price.
According to market sources, the government had set its expectations at around 1.7–1.8 times price-to-book, which translates to a share price in the range of Rs 92-98. But, reportedly, the best bid received was only in the 1.5 times price-to-book range, or approximately Rs 80-82 per share.
As of December 31, 2025, the book value of IDBI Bank was at Rs 54.41 per share. “The gap between what the government wanted and what investors were willing to pay led to the collapse of the process,” said a bank analyst.
The stock of IDBI Bank had surged by 65% to a 52-week high of Rs 118.45 on January 5, 2026 on hopes of a stake sale.
KMB withdraws after due dilligence
The competitive landscape narrowed significantly when Kotak Mahindra Bank had withdrawn after due diligence, and Emirates, once seen as a potential suitor, showed a lack of interest after acquiring RBL Bank. “Emirates had no interest in IDBI and was content to align with the government’s broader policy stance, rather than pursue another acquisition,” said a senior banker.
That left Fairfax as the only serious player in the fray. It has been reported that employees at its subsidiary CSB Bank expressed strong opposition to the deal, fearing that a takeover would erode their identity and possibly lead to a name change. This internal resistance made Fairfax cautious, and it chose to bid lower rather than risk over-committing to a transaction that could face cultural and organisational pushback.
What do analysts say?
A bank analyst said, “For bidders that already have presence in the Indian banking sector, IDBI’s legacy issues and regulatory complexities offer little justification for paying the premium demanded. The second issue is while IDBI’s balance sheet may be stable, its inability to attract new clients leaves it dependent on legacy accounts.”
Says a bank analyst, “The disinvestment was called off not because of a lack of interest, but because the numbers didn’t add up. Emirates had already moved on, Fairfax bid conservatively, and the government refused to compromise. But in all of this, the failed sale leaves IDBI Bank’s future uncertain once again.”
The strategic privatisation of IDBI Bank was to be the main source of revenue for the government’s Rs 80,000-crore privatisation programme for FY27, as it was eyeing Rs 30,000-32,000 crore from the stake sale. The government (30.48%) and LIC (30.24%) together were planning to divest a combined 60.7% stake in IDBI Bank.