The government is preparing to invite financial bids for the long-awaited IDBI Bank privatisation, with an Inter-Ministerial Group (IMG) meeting scheduled on October 31 to finalise the process. The IMG, comprising secretaries from the Department of Investment and Public Asset Management (DIPAM) and the Department of Financial Services (DFS), will review and approve the bidding framework.
Key Focus: Approval of Share Purchase Agreement
According to government officials, the IMG meeting will clear the final draft of the Share Purchase Agreement (SPA) — a crucial transaction document that outlines buyer obligations, transfer of management control, and post-sale responsibilities. Once approved, it will pave the way for the invitation of financial bids from shortlisted investors.
A government source said, “Most of the groundwork has been completed. The meeting at the end of this month is expected to clear the remaining procedures so that financial bids can be invited without delay.”
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Privatisation in the Final Phase
The approval of the SPA and subsequent bidding round will mark the final phase of IDBI Bank’s privatisation, a process ongoing since 2021. The Centre and Life Insurance Corporation (LIC) together hold about 94.71% of the bank and plan to sell 60.72% to a strategic investor, transferring full management control.
Officials indicated that the transaction documents are in advanced stages, and after the IMG’s clearance, DIPAM will swiftly move to invite financial bids. Approvals from the Core Group of Secretaries on Disinvestment (CGD) and the ministerial panel led by the Finance Minister will follow.
Timeline for Bids
Financial bids are expected to be invited between October and December 2025, after which the evaluation process will begin. Once a winning bidder is finalised and approved by the Cabinet Committee on Economic Affairs (CCEA), the transaction will move toward closure.
If completed, this will mark India’s first bank privatisation in over two decades. The Centre has earlier expressed its intent to conclude the sale within the current fiscal year.
A government official said, “This sale is not just about one bank – it’s about demonstrating that India’s privatisation framework can work even in the financial sector, where regulatory sensitivities are high.”
Litmus Test for Bank Privatisation
Experts view the IDBI Bank sale as a test case for India’s future public sector bank disinvestments. The transaction involves multiple ministries and regulators, making it a benchmark for the government’s broader banking reform and privatisation strategy.
The process began in October 2021, when the government first invited Expressions of Interest (EoIs) from potential investors. Once financial bids are assessed, the deal will move to the CCEA for final approval before completion.
Explained: Key Elements of the Process
What is a Share Purchase Agreement (SPA)?
An SPA is a legally binding contract that defines the terms under which shares are sold, detailing the obligations of both buyer and seller, management transfer, and post-sale responsibilities.
Role of the Inter-Ministerial Group (IMG):
Co-chaired by the secretaries of DIPAM and DFS, the IMG supervises strategic disinvestment procedures — reviewing key transaction documents, finalising the SPA, and setting timelines for bids.
Current Ownership:
The Government of India and LIC jointly own 94.71% of IDBI Bank and intend to divest 60.72% of their combined stake to a strategic investor.
Significance:
The deal represents a milestone in India’s disinvestment drive, serving as the first test of the government’s bank privatisation model.
Next Step:
After bid evaluation, final approval from the Cabinet Committee on Economic Affairs will mark the completion of the transaction.
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