The government is moving closer to completing the strategic disinvestment of IDBI Bank by the end of the current financial year. According to DIPAM Secretary Arunish Chawla, potential buyers have nearly finished their due diligence process, and the sale is expected to be wrapped up by September 2025.
Following the announcement, IDBI Bank shares surged 9%, closing at ₹98.16 on the stock exchange.
IDBI Bank Strategic Sale Timeline
- Process Status: Due diligence almost complete
- Expected Completion: By September 2025 (FY26-end)
- Market Impact: Stock jumped 9% post announcement
This transaction marks a key milestone in the government’s broader PSU disinvestment agenda.
Broader PSU Disinvestment and Delisting Plans
Alongside IDBI Bank’s divestment, the government is working on a larger stake sale roadmap for public sector undertakings (PSUs):
- Asset Monetisation Target (FY26): ₹47,000 crore
- Already raised ₹22,000 crore in Q1
- Government Holding Rationalisation:
- PSUs with over 90% ownership will be brought down to 90%
- PSUs with 75–90% stake will be reduced to 75%
This approach aims to increase free float in PSU stocks, boosting liquidity in the secondary market.
LIC Stake Sale Updates
On Life Insurance Corporation of India (LIC), Chawla clarified that any future stake sale will be a joint decision involving SEBI, DIPAM, LIC management, and merchant bankers.
- LIC Market Value: ~₹6 lakh crore
- 1% Stake Value: ~₹6,000 crore
- Future Stake Sales: To be timed carefully to align with market liquidity conditions
Push for Stronger Dividend Policies in PSUs
The government is also pressing public enterprises to adopt better dividend distribution practices. Chawla reiterated the guideline that PSUs should pay 30% of profit after tax (PAT) or 4% of net worth, whichever is higher, as dividends.
“We made the highest dividend last year, and this year we hope to sustain or even improve,” he said.
This move is expected to provide greater returns to shareholders, while also supporting government revenues.
Key Takeaways for Investors
- IDBI Bank divestment expected by September 2025
- PSU stake sales to boost market liquidity and free float
- LIC stake sales under consideration, depending on market conditions
- Dividend policies being tightened for consistent shareholder payouts
Disclaimer
This article is prepared for educational purposes only. The securities and companies mentioned are illustrative examples and not investment recommendations. This does not constitute financial advice.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.