The Ministry of Finance on Thursday defended the valuation and bidding process for the strategic sale of IDBI Bank, saying the procedure adopted by the government helped increase the transaction value by ₹3,917 crore. It said the Core Group of Secretaries on Disinvestment (CGD) was given special powers to decide the process for the final round of bidding and address any procedural issues.
The ministry said the CGD, which was authorised by the Cabinet Committee on Economic Affairs (CCEA), had reviewed the entire valuation exercise to ensure that the strategic disinvestment was carried out effectively.
It also clarified that the reserve price for the transaction was not changed during the process. “The reserve price was neither decreased nor increased, and the first round itself became functus officio after the initial bids were not approved,” it said.
On October 14, the CCEA approved the strategic sale of a combined 60.72 per cent stake in IDBI Bank to Canadian investment firm Fairfax Financial Holdings. The transaction is valued at around ₹53,000 crore, with the approved bid price set at ₹81 per share.
How the bidding process was conducted
According to the ministry, the initial round of bidding took place in the financial year 2025-26 and was conducted by the Department of Investment and Public Asset Management (Dipam) based on its established internal practices. These practices are indicative guidelines rather than fixed rules or regulations, it said.
The ministry explained that there is no pre-decided benchmark for bidding. Interested parties carry out their own assessments of a company’s value and submit confidential offers. “Independent agencies are hired to do a fair valuation of the enterprise contemporaneously, which is then used as a comparator to assess the reasonableness of the bids submitted. The bid discovered price and the comparative valuation can, therefore, be above or below each other,” the release said.
Since DIPAM does not have a prescribed internal procedure to deal with such situations, the CCEA had delegated special powers to the CGD to take decisions on the matter, the ministry added.
How was the valuation methodology approved?
The ministry said the CGD examined the valuation methodology in April 2026, before inviting bids for the best-offer round.
It added that the valuation agencies began working on updated assessments in May, after the financial accounts for the year ended March 31, 2026, became publicly available towards the end of April. This was necessary to ensure that the valuation was based on financial information available around the time of bidding.
The ministry said the process maintained confidentiality. “The process remained double blind because the bidder did not know the valuation and the valuators did not see the bids. It is only the CGD which gets to see a complete picture and compares the bids with fair valuations to take a final call on the reasonableness of the bids submitted,” it said.
The valuation was conducted by two independent advisers using separate methods, the release said. The transaction adviser handled the business valuation and appointed experts trained in the Market Multiple Method, given the complexity of the transaction.
The ministry also explained the bank’s classification. IDBI Bank was a government-owned bank until 2019, but became a government-controlled bank after Life Insurance Corporation of India (LIC) acquired a majority stake that year.
“Since there is no specific regulatory protocol for this situation, the RBI started treating it as a private bank only for regulatory purposes, even though the ownership stayed overwhelmingly with the LIC and the GoI, and the market investors continued to value it as a public sector entity,” the release said.
Why the government says the deal value increased
The ministry said the asset valuer also followed established valuation methods and accounted for disputed tax demands. The provision for these demands was included as an indemnity, following a common request from qualified bidders, to encourage higher offers.
“This remains a low probability event and revenue neutral for the government, as only the additional tax demand, if paid at all, will be eligible for reimbursement. The potential liability that could arise on this account was only ₹627 crores while the bid discovered price enhanced by ₹3,917 crores enhancing the value of the transaction for the GoI and the LIC.”
It said the government and LIC would continue to hold residual stakes in the bank, allowing them to benefit from any increase in its value following the strategic restructuring.
