Union finance minister Nirmala Sitharaman on Friday said “all due process has been followed” in the case of IDBI Bank strategic restructuring, and that the lender is now poised for its next phase of growth.
Prime Minister Narendra Modi-led government “revived IDBI Bank through professionalism, prudence and recapitalisation of more than ₹25,000 crore”, she said in a post on microblogging site X.
Her comments came in response to senior Congress leader Rahul Gandhi’s allegations that bids for IDBI Bank were first seen, and then the sale price was fixed. Gandhi’s allegations followed a Business World report on Thursday claiming the government breached its own rules on disinvestment, which required officials not to open bids before the reserve price is fixed.
On 14 October, the government announced the sale of a combined 60.72% stake held by the government and the state-run Life Insurance Corporation of India in IDBI Bank to a -controlled entity for ₹52,878 crore. The government and LIC will still hold 34% after the transaction is concluded.
“IDBI Bank was handed over to us in poor shape, as IDBI itself was forced to lend to large business groups with close connections to @INCIndia leaders such as Videocon, Winsome, ABG Shipyard, Kingfisher, etc. These turned into bad loans, causing huge losses for IDBI Bank, which we recognised,” Sitharaman wrote in her post.
Bank was placed under the Reserve Bank of India’s corrective framework for stressed lenders in May 2017, and exited it in March 2021 following a capital infusion and improved financial health.
Sitharaman’s post also drew attention to her ministry’s clarification on Thursday.
On Thursday, the Union finance ministry said internal disinvestment practices developed over time “are in the nature of indicative guidelines and not hidebound rules or regulations”.
“The foreword itself states that the procedure suggested is not to be construed as a rigid, legal framework, which may require due adaptation/modification,” the ministry said.
In 2017, the Cabinet Committee on Economic Affairs had also empowered the core group of secretaries on disinvestment (CGD) “to remove all difficulties, including deviations from procedure, to ensure effective implementation of the strategic disinvestment transactions”, it said.
Bids in the first round, conducted on the basis of initial internal guidelines and opened in March 2026, were below the reserve price of ₹94.42 per share, prompting a fresh valuation exercise.
The valuation methodology was later “reviewed by the CGD in April 2026 before the invitation of best offer bids” in the second round, it said. The valuers “had started working on the revised valuations in May, 2026 itself. The process remained double blind because the bidder did not know the valuation and the valuators did not see the bids,” it added.
“It is only the CGD (senior officials’ group) which gets to see a complete picture and compares the bids with fair valuations to take a final call on the reasonableness of the bids submitted,” it added.
Subsequently, the bidder whose revised bid exceeded those of its competitors and the revised benchmark price of ₹75.99 per share was declared the winner. “The winning best offer bid of ₹81 per share was above the benchmark price, as well as the fair value estimates of both the independent valuation agencies. It was, therefore, adjudged to be reasonable and approved,” said Arunish Chawla, secretary, the Department of Investment and Public Asset Management (Dipam) after the meeting to approve the sale.
The valuation didn’t factor in the market price of the bank’s share, as it fluctuated sharply between ₹61.01 and ₹118.38 per share, he had said.
It also cited the 14 October press note, which explained that there is no “a priori benchmark for bidding”.
The report also alleged that the government agreed to cover IDBI Bank’s disputed income tax cases to encourage suitors to sweeten their bids after the first round failed, essentially handing “a tax gift with no price tag”.
In its response, the ministry said the potential liability arising on this account was only ₹627 crore, while the bid was sweetened by ₹3,917 crore due to this step, “enhancing the value of the transaction for the government and the LIC”. Moreover, this “remains a low probability event and revenue neutral for the government”, it said.
The Business World report had also claimed that the bank’s valuation was compared with that of other state-run lenders, even though it is categorized as a private bank.
In response, the ministry said the bank was a government-‘owned’ banking company till 2019, but became a government-‘controlled’ banking company after the acquired 49.24% in 2019.
