IDBI Bank shares sink 16% amid uncertainty over govt stake sale

Shares of IDBI Bank tumbled sharply on Monday, falling nearly 16% in early trade after reports suggested that the government may scrap its plan to sell a majority stake in the lender.

Weighed down by the development, the banking stock dropped as much as 15.67% to ₹77.75 on the BSE. The counter witnessed strong trading volumes, with over 34 lakh shares changing hands in the first hour of trade, while the bank’s market capitalisation slipped to around ₹83,492 crore.

Stock under sustained pressure

The banking stock has been under pressure in recent months. The shares have declined nearly 30% over the past month and are down about 24.5% so far in 2026. Over the past six months, the stock has slipped around 16%.

Despite the recent slump, the stock has gained about 7.5% over the past one year. It had touched a 52-week high of ₹118.45 on January 5, 2026, while the 52-week low stands at ₹72.04, recorded on March 17, 2025.

The sharp fall on March 16 also reflects weak technical indicators. The shares are currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day and 200-day averages, signalling sustained downward momentum in the counter.

Meanwhile, Indian equity benchmarks – Sensex and Nifty – were down around 0.4% each in the first hour of trade so far, paring opening gains.

Privatisation process hits roadblock

The decline came amid reports that the Centre’s long-pending privatisation effort for the bank has effectively come to a standstill. The government had initiated the process in January 2023 to sell a majority stake in the lender, but the transaction has faced hurdles due to valuation concerns and regulatory constraints.

According to sources, the reserve price for the stake sale was set too high relative to the bank’s price-to-book valuation and its relatively low free float. Under the current framework, authorities cannot accept bids below the specified threshold, making it difficult to move the process forward.

Stake sale structure

The Centre currently holds a 45.48% stake in the lender, while Life Insurance Corporation of India (LIC) owns another 49.24%. Together, the two government-linked shareholders control over 94% of the bank’s equity.

The government and LIC had planned to sell a combined 60.7% stake in the bank, along with transferring management control as part of the Centre’s broader privatisation programme.

The proposed disinvestment in IDBI Bank was expected to become one of the largest foreign investments in India’s banking sector, with the government aiming to complete the process by March 2026.

If the sale is paused or cancelled, the government may need to reassess the valuation, modify the transaction structure, or reopen the bidding process at a later stage.

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