IDBI sale setback leaves over half of FY26 disinvestment receipts unmet

The Centre’s decision to scrap the strategic sale of IDBI Bank has dealt a setback to its disinvestment receipts, leaving more than half of the revised FY26 target yet to be achieved and removing a key large-ticket transaction from the pipeline.

The government called off the process after financial bids from shortlisted investors fell short of the reserve price, highlighting a mismatch between valuation expectations and investor appetite. Officials said the sale would be revisited at a later stage.

“It is not the best environment to have proceeded with,” said a government official.

The development comes against the backdrop of already scaled-down expectations. As per the Union Budget 2026–27 Annual Financial Statement, disinvestment receipts for 2025–26 have been revised to Rs 33,837 crore from the Budget Estimate of Rs 47,000 crore.

So far, the government has mobilised about Rs 15,562 crore, less than half of the revised target underscoring limited inflows and reliance on smaller transactions.

Data from the Department of Investment and Public Asset Management shows that receipts have largely come from minority stake sales via the offer-for-sale (OFS) route. Key contributors include Bharat Heavy Electricals Ltd, Mazagon Dock Shipbuilders Ltd, Bank of Maharashtra, and Indian Railways Finance Corporation.

In the absence of a major strategic sale like IDBI Bank, the disinvestment programme is increasingly dependent on incremental stake dilutions, which typically yield smaller proceeds and are less likely to bridge large gaps in targets.

The Centre, along with the Life Insurance Corporation of India, had planned to divest a 60.72% stake in IDBI Bank, making it one of the most significant privatisation efforts in recent years. The government has set a disinvestment target of Rs 80,000 crore for FY27, higher than the FY26 Budget Estimate.