Centre Pushes Ahead With IDBI Bank Disinvestment; PSU Bank Stake Sales Likely in FY27

The Indian government is continuing with its disinvestment drive and has confirmed that the strategic sale of IDBI Bank is progressing on schedule. The Centre, along with LIC, plans to jointly sell a 60.72% stake in IDBI Bank — with 30.48% held by the government and 30.24% by LIC. Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), stated that the divestment is being carried out as part of the broader asset monetisation strategy for FY25, and that the process remains unaffected by global macroeconomic uncertainties.

Chawla described the IDBI Bank disinvestment as a strategic sale being executed through a detailed, multi-stage process. Due diligence for the sale has been completed, and negotiations are underway for the share purchase agreement. A data room has been set up, and the transaction has already attracted multiple bids. The focus remains on structured disinvestment in public sector banks to meet regulatory requirements and create long-term value.

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At the same time, the government is also looking to monetise land and infrastructure assets of MTNL and is following a flexible approach to achieve minimum public shareholding norms. Chawla confirmed that the government may opt for smaller, more frequent offers for sale (OFS) to ensure liquidity in the market and protect share prices. For FY26, the Centre has set a disinvestment and asset monetisation target of ₹47,000 crore.

Meanwhile, the government is planning to offload minor stakes in five public sector banks — Bank of Maharashtra, Indian Overseas Bank (IOB), UCO Bank, Central Bank of India, and Punjab and Sind Bank — in FY27. These sales are likely to happen via the OFS route, which will mark a first for PSU banks, as earlier stake reductions were usually done through Qualified Institutional Placements (QIPs). While QIPs help raise capital for the banks themselves, OFS would reduce the government’s stake and bring proceeds directly to the exchequer.

Officials have clarified that a strategic disinvestment in these five banks is not on the cards for now, as such decisions require cabinet-level approvals. The OFS plan has been pushed to FY27 due to an already busy disinvestment calendar for the current year. DIPAM has started the preparatory work, including the empanelment of transaction advisors and merchant bankers. It is also tracking valuation trends and market conditions to determine the right timing for the stake sales.

The move signals the government’s renewed focus on PSU bank disinvestments, especially in light of the positive market interest generated by the ongoing IDBI Bank sale.