Why Govt Must Press Ahead With IDBI Divestment The fate of IDBI’s divestment remains uncertain as of March 2026, with bids from known bidders—Emirates NBD and Fairfax—falling below the government’s reserve price for a 60% stake sale. This has raised concerns that the current round may be canceled. However, the article argues that the government must persist with the divestment despite challenges. The NDA government has been working on IDBI’s disinvestment for over a decade, yet the process remains incomplete. Finance Minister Arun Jaitley first announced the plan in his 2016 budget speech, but as of 2026, progress has stalled. This contrasts sharply with the successful divestment of smaller banks like RBL and Yes Bank, which attracted foreign institutional investors just six months prior. Comparisons highlight IDBI’s potential. As of December 31, 2025, IDBI’s return on equity (ROE) stood at 14.5%, and its return on assets (ROA) was 1.83%, outperforming RBL and Yes Bank. RBL’s ROA was 0.53% and ROE 4.93% at the time of its stake sale, while Yes Bank’s ROA was 0.8% and ROE 5.4%. Despite these lower metrics, RBL and Yes Bank managed to secure significant investments—Rs 26,850 crore and Rs 15,880 crore, respectively. The government’s reserve price for IDBI likely reflects a valuation closer to 2 times book value, given the higher ROE and ROA. However, IDBI faces unique challenges. A buyer acquiring a 60% stake would only gain 26% voting rights, limiting control over key decisions. The remaining 40% would be held by the government and LIC, which could lead to conflicting priorities. Former Bank of Baroda Chairman S S Mundra noted that the government might prioritize fiscal considerations, while LIC seeks higher returns for investors, creating uncertainty for bidders.#govt #emirates_nbd #fairfax #idbi #arun_jaitley
