IDBI Bank Denies Receiving Government Notification on Stake Sale Plan Cancellation

IDBI Bank's Stake Sale Status Remains Unclear

On Monday, March 11, 2024, IDBI Bank filed a regulatory update stating that it cannot confirm or deny reports of a scrapped stake sale in the lender. The bank cited that the strategic disinvestment process is confidential and being handled by the Government of India (GOI).

The clarification came after IDBI Bank shares plummeted 16% in early trading, marking its steepest intraday decline since June 2024. The stock performance was reportedly triggered by news that the government had scrapped bids for a majority stake in the lender due to offers reportedly falling short of the reserve price.

IDBI Bank was launched into a strategic disinvestment process in 2022 by the government and Life Insurance Corporation of India (LIC), with the aim of selling approximately 60.7% of the bank's stake. Currently, the government holds a 45.5% equity stake and plans to divest 30.5%, while LIC owns 49.2% and intends to offload 30.2%. The stake sale was expected to fetch a combined Rs 66,000 crore.

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The potential sale has been one of the government's key efforts to reduce state ownership in the banking sector. Despite the setback in the disinvestment process, IDBI Bank has returned to profitability in recent years after capital support and efforts to reduce non-performing assets. Over the past year, the stock has gained approximately 9.2%, outperforming the Nifty 50, which has risen around 3.4% during the same period.