India’s government is exploring a rare tendering provision to accept below-reserve-price bids from Fairfax Financial and Emirates NBD, a move that could close a $7-billion privatisation without relaunching the entire process.
Key points at a glance
- Centre examining legal provisions under the tendering framework to accept Fairfax and Emirates NBD bids that fell below the undisclosed reserve price in February 2026.
- Reports indicate bids ranged between ₹40,000–45,000 crore vs. a government valuation closer to ₹72,000 crore, a gap of roughly 40–45%.
- A reserve price cut of up to 20% is being examined, per Bloomberg’s May 2026 reporting.
- IDBI Bank’s stock fell ~19% in mid-March 2026 when deal cancellation reports broke; shares now trade around ₹73–75.
- IDBI Bank posted a full-year net profit of ₹9,513 crore in FY26, up 26.59%, the bank’s strongest performance in years.
- Finance Minister Nirmala Sitharaman confirmed at the ET Awards (April 2026) that divestment will continue.
- Bringing in new bidders would require fresh RBI “fit and proper” approvals, extending the timeline by several months.
What is happening and why it matters
India’s Centre is quietly working to resurrect the stalled privatisation of IDBI Bank by examining legal provisions under its disinvestment tendering framework, provisions that could allow it to accept earlier bids from Fairfax Financial Holdings and Emirates NBD, even though those bids fell below the confidential reserve price, according to people familiar with the matter cited by Economic Times.
The mechanism under examination would allow the government to proceed without scrapping the current process and issuing a fresh Request for Proposals, a route that would trigger new RBI “fit and proper” clearances and push the timeline back by several months. Instead, officials are exploring whether existing legal provisions allow a negotiated settlement with the two bidders already in the running.
Per Bloomberg’s May 2026 reporting, the most likely near-term outcome is a reserve price cut of up to 20%, with Fairfax, the primary remaining interested party, invited back rather than a full relaunch.
The $7-billion deal that missed every deadline
| Timeline | Key development |
|---|---|
| Feb 2016 | Privatisation of IDBI Bank was first proposed in the Union Budget for FY17. |
| May 2021 | The cabinet approves the strategic disinvestment of IDBI Bank, the formal privatisation announcement. |
| Oct 2022 | Request for Proposal (RFP) issued; KPMG appointed as transaction adviser; expressions of interest invited. |
| Feb 2026 | Financial bids received from Fairfax Financial and Emirates NBD. Kotak Mahindra Bank subsequently clarified it did not submit a financial bid. |
| Mar 2026 | Inter-ministerial group reportedly recommends terminating the ongoing process after bids came in below the reserve valuation. IDBI Bank stock falls around 19%. |
| Apr 2026 | Finance Minister Nirmala Sitharaman states at the ET Awards that the government remains committed to the divestment process. |
| May 2026 | The Government examines legal options to revive the bidding process; a potential 20% reserve price cut is under consideration, according to Bloomberg. |
Ownership structure and what is on the block
The Centre and Life Insurance Corporation of India together hold approximately 94.72% of IDBI Bank. The divestment package puts 60.72% of the bank up for sale.
| Holder | Current stake | Stake to be divested |
|---|---|---|
| Government of India | 45.48% | 30.48% |
| LIC of India | 49.24% | 30.24% |
| Public float | 5.29% | — |
| Total on the block | 94.72% | 60.72% |
The valuation gap—bids vs. government expectations
The core impasse is a large gap between what bidders offered and what the government expected. The figures below come from secondary reporting (Whalesbook, April 24, 2026) and have not been independently confirmed by ET, Bloomberg, or Reuters. They are presented here with that attribution.
| Benchmark | Estimated figure |
|---|---|
| Bids received (Fairfax + Emirates NBD) | ₹40,000–45,000 crore Unconfirmed — secondary source |
| Government reserve price (inferred) | ~₹72,000 crore |
| Valuation gap | ~₹25,000–30,000 crore (40–45%) |
| Reserve price cut being examined | Up to 20% (Bloomberg, May 2026) |
| Potential exchequer proceeds (if sale completes) | ~₹33,000 crore |
How options compare — three paths forward
| Route | What it means | Status / implication |
|---|---|---|
| Accept existing bids via legal provisions. | Use tendering framework clause to accept below-reserve bids without relaunching | Under examination (ET, May 2026) |
| Cut reserve price by up to 20% | Officially lower the floor and invite Fairfax back at reduced valuation | Most likely near-term outcome (Bloomberg) |
| Relaunch full process | Issue fresh RFP and invite new bidders | Requires new RBI approvals; delays by months |
Stock performance — the numbers
| Metric | Value | Context |
|---|---|---|
| Share Price (May 2026) | ₹73–75 | NSE-traded stabilised range after deal uncertainty |
| Closing Price at Deal Collapse | ₹74.28 | NSE closing price in mid-March 2026 |
| Decline After Deal Collapse News | ~19% | Fall from intraday peak following reports of bid-process breakdown |
| 52-Week High | ₹118.38 | Recorded before privatisation process concerns intensified |
| Market Capitalisation (May 2026) | ₹78,815 crore | Based on share price near ₹74 |
| P/E Ratio | 8.58x | Significant de-rating after privatisation uncertainty |
Q4 FY26 financials — a bank performing ahead of expectations
IDBI Bank’s underlying financials are the irony at the heart of this story, the bank is performing better than it has in years, even as its privatisation stalls.
| Metric | Q4 FY26 | Q4 FY25 |
|---|---|---|
| Net Interest Income (NII) | ₹3,851 crore +17% | ₹3,290 crore |
| Net Interest Margin (NIM) | 4.15% | 4.00% |
| Net Advances (YoY) | ₹2,53,626 crore +16% | — |
| Total Deposits (YoY) | ₹3,47,163 crore +12% | — |
Check Live: IDBI BANK Share Price Chart: Live
| Full-year metric (FY26) | FY26 | Growth |
|---|---|---|
| Standalone net profit | ₹9,513 crore | +26.59% |
| Total income | ₹35,744 crore | +5.67% |
What the bidders are doing now
- Fairfax Financial Holdings (Canada): Prem Watsa-led fund is the primary remaining bidder. Fairfax already holds a majority stake in CSB Bank and had reportedly intended to merge IDBI Bank with CSB Bank post-acquisition, a strategic integration angle that significantly affects its valuation logic.
- Emirates NBD (UAE): Submitted a bid but has separately signed a deal to acquire a controlling stake in RBL Bank, which may affect its appetite and capacity for a second simultaneous Indian banking acquisition.
- Kotak Mahindra Bank: Confirmed it did NOT submit a financial bid in the final round. Not in the current process.
Why global uncertainties played a role
A government official cited “prevailing global uncertainties and continuously changing market conditions” as factors affecting investor appetite and valuations. This is a reference to elevated geopolitical risk premiums and currency volatility that made large illiquid equity acquisitions in emerging markets less attractive at the price the government was seeking.
The thin public float problem compounds this: with only 5.29% of shares in public hands, there is no deep liquid market to validate the reserve price. Buyers were essentially being asked to trust a government-set valuation with limited independent price discovery.
The definitive near-term outlook
Bloomberg’s May 2026 reporting indicates the most likely near-term outcome is a reserve price cut of up to 20%, with Fairfax being the primary counterparty invited back. A full process relaunch remains possible but would extend the timeline by several months due to mandatory fresh RBI “fit and proper” approvals for any new entrants. A ministerial panel will make the final call, a decision expected to crystallise in the coming weeks.
The next stock-price trigger for IDBI Bank will be an official announcement: either a confirmed deal revival with revised terms or a formal reset of the privatisation clock.
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