Shares of IDBI Bank witnessed a steep decline in early trading on Monday after reports suggested that the Indian government may scrap the ongoing privatisation process of the lender. The stock dropped as much as 13.55 percent to ₹79.69 in morning trade, reflecting investor concerns over the possible collapse of a strategic stake sale that has been underway for several years.

According to media reports from global financial agencies, the government is likely to reject the bids submitted for the bank as they were below the reserve price set for the transaction. The proposed divestment involves the sale of a combined 60.7 percent stake held by the Government of India and Life Insurance Corporation of India. If the process is formally abandoned, it would effectively end the current phase of privatisation and potentially push the government to revisit the sale at a later stage when market conditions improve.

The privatisation effort was first announced in 2022 as part of the government’s broader strategy to reduce its presence in the banking sector and unlock value from state-owned assets. Under the plan, the government and LIC jointly intended to transfer management control of the bank to a strategic investor.

The process had attracted significant attention because it represented one of the few attempts to privatise a public sector lender in India in recent decades. Additional details about the process can be explored through policy discussions available at https://www.financialexpress.com.

However, the latest reports indicate that the valuation gap between the government’s expectations and the offers received from potential buyers has emerged as a key hurdle. Authorities appear reluctant to proceed with the sale at a lower valuation, particularly given that the bank has undergone several years of balance sheet clean-up and operational improvements.

IDBI Bank has shown gradual financial stabilisation in recent years following its classification under the Reserve Bank of India’s Prompt Corrective Action framework earlier in the previous decade. The bank exited the restrictive framework after improving its asset quality and capital position. LIC’s investment in the lender also helped strengthen its capital base and governance structure. Against this backdrop, the government likely expected stronger valuation interest from potential bidders.