IDBI Bank Shares Drop Over 15% After Reports Government May Scrap Majority Stake Sale

Shares of IDBI Bank fell more than 15% in intraday trade on March 16 after reports suggested that the Indian government may abandon plans to sell a majority stake in the lender due to lower-than-expected bids, according to Reuters.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The stock fell as low as 15.34% to ₹78.05 on the BSE, bringing it closer to its one-year low of ₹72.04. Volumes in the company's shares traded higher than usual.

The disinvestment proposal includes the sale of a combined holding of 60.70% by the Government of India and Life Insurance Corporation of India.

Reports Indicate Divestment Process May Be Scrapped

According to Reuters, the government may scrap the ongoing divestment process as the bids received from interested investors fell short of the reserve price.

People familiar with the matter told Reuters that the offers received did not meet the minimum valuation expectations for the stake sale. The report indicated that authorities are considering withdrawing the sale process.

The divestment plan was first initiated in 2022, when the Government of India and Life Insurance Corporation of India announced plans to jointly sell a controlling stake in the lender as part of the government’s broader disinvestment strategy.

Earlier reports had indicated that potential bidders included Fairfax Financial Holdings, a Canada-based investment group, and Emirates NBD, a banking group headquartered in Dubai.

As of the December quarter of FY26, the Government of India held a 45.48% stake in IDBI Bank, while Life Insurance Corporation of India owned 49.24%, resulting in a combined promoter holding of 94.71%, according to company filings.

Recent Financial Performance

The lender has reported improved profitability in recent years.

For the December quarter of FY26, IDBI Bank reported a net profit of ₹1,935 crore, compared with ₹1,908 crore during the same quarter a year earlier.

However, the bank’s net interest income declined during the period. Net interest income stood at ₹3,209.5 crore in the December quarter, down 24% year-on-year from ₹4,228.2 crore reported in the corresponding quarter of the previous year.

Asset Quality Trends

The bank also reported improvement in its asset quality indicators.

IDBI Bank’s gross non-performing asset ratio declined to 2.57% in the third quarter of FY26 from 3.57% in the same period a year earlier, according to company disclosures.

The net non-performing asset ratio remained at 0.18% during the quarter.

The sharp fall in the bank’s share price on March 16 followed the reports regarding the potential withdrawal of the government’s stake sale plan, which had been under consideration since 2022.