The government on Thursday defended the process followed for the strategic sale of IDBI Bank, saying the second round of bidding was conducted under powers delegated to the Core Group of Secretaries on Disinvestment (CGD) and that the reserve price was neither increased nor reduced.
In a clarification issued by finance ministry, the government said the initial round of bidding was conducted in 2025-26 under the Department of Investment and Public Asset Management’s (DIPAM) indicative guidelines, which allow flexibility in complex strategic transactions. The first round became functus officio — ceased to have effect — after the initial bids were not approved, it said.
The clarification comes amid questions over the process adopted for the sale of IDBI Bank, in which the government and Life Insurance Corporation of India (LIC) are divesting a majority stake.
The ministry said there was no pre-determined benchmark for bids and that bidders independently valued the bank before submitting confidential offers. Independent valuation agencies were appointed to assess the enterprise’s fair value, which was then compared with the bids to determine whether the offers were reasonable. The bid-discovered price and the valuation could be higher or lower than each other, it said.
The government cited a provision in the request for proposal (RFP) stating that if the highest financial bid fell below the reserve price, the government would decide the further course of action, and qualified bidders could not subsequently question that decision.
As DIPAM had no prescribed internal procedure for handling such a situation, the Cabinet Committee on Economic Affairs (CCEA), in August 2017, had empowered the CGD to take policy decisions on procedural issues and permit deviations where necessary for effective implementation of strategic disinvestment transactions, the ministry said. The second, or best-offer, round was conducted under these delegated powers.
The ministry also said the CGD reviewed the valuation methodology in April 2026, before inviting best-offer bids. Since the valuation had to reflect the financial position contemporaneous with the bids, independent agencies began revising their assessments in May, after the financial accounts for the year ended March 31, 2026, became publicly available.