The Centre has defended the valuation process for the ₹52,878 crore sale of a 60.72% stake in IDBI Bank, maintaining that the reserve price remained unchanged during the second round of bidding.
In a clarification, the Finance Ministry said the revised bidding procedure helped secure a ₹3,917 crore increase in the discovered bid price.
The statement comes amid scrutiny of the bank's privatisation and employee concerns over reservation provisions, service conditions and pension benefits.
The ministry said the first bidding round became ineffective after the initial offers were not approved.
The Core Group of Secretaries on Disinvestment (CGD) subsequently determined the procedure for a second round seeking the best offers.
The Cabinet Committee on Economic Affairs (CCEA) had authorised the group to address procedural issues and permit necessary changes in strategic transactions.
According to the ministry, the initial bidding process during 2025-26 followed the Department of Investment and Public Asset Management's (DIPAM) indicative guidelines.
The government maintained that no predetermined bidding benchmark existed and that prospective buyers independently submitted confidential offers.
Two independent advisers conducted valuations using different methods.
The business valuation relied on market multiples of listed public sector banks, while the asset valuation considered factors including disputed tax demands.
The CGD reviewed the valuation methodology in April 2026 before fresh bids were invited.
Addressing concerns over tax indemnity, the ministry said the potential liability amounted to ₹627 crore, substantially below the ₹3,917 crore increase in the discovered bid price.
It described the possibility of the liability materialising as low and said reimbursement would apply only if an additional tax demand was paid.
The Union Cabinet approved the sale to a subsidiary of Canada's Fairfax Financial Holdings on Oct 14.
Finance Minister Nirmala Sitharaman described the transaction as strategic restructuring rather than strategic disinvestment.
Following the transaction, the government will retain a 15% stake in IDBI Bank, while Life Insurance Corporation of India (LIC) will hold 19%.
