The process of privatization of IDBI Bank has been in discussion for a long time. From customers to stock market investors, everyone's eyes are on who will take charge of this government bank. Kotak Mahindra Bank was leading in this race, but now the picture has changed. Kotak Bank has withdrawn its steps from this big deal. The bank's Chief Executive Officer (CEO) Ashok Vaswani recently told why he refused to bid. His direct answer was that the price of IDBI Bank is being asked too high.
Kotak Mahindra Bank seemed serious about the acquisition of IDBI Bank from the very beginning. The bank had also submitted 'Expression of Interest' (EoI) for this. Even the stringent standards of 'fit-and-proper' from the country's central bank RBI were met. That means, on paper, Kotak Bank was fully eligible for this purchase. Despite this, when the time came to make the final bid, the bank pulled out.
Ashok Vaswani revealed this mystery while talking to the media after the bank's excellent March 2026 quarter results. He clarified that the interest among buyers is limited because the valuation decided by the government is much higher than the reality. If we understand from the perspective of a common customer or investor, then if the price asked for a property is higher than its actual value and profit potential, then buyer hesitation is natural.
Now the biggest question that arises is that when big buyers are not ready to pay such a high price, will the government reduce the rates of IDBI Bank? At present this does not seem to be happening. An official associated with the Finance Ministry has recently indicated that the privatization plan is on track and the government is exploring all options.
The government's clear argument is that IDBI Bank is profitable and its performance is better on other banking parameters also. Therefore, there is not much possibility of cutting its valuation. However, it is also true that the bids that came initially were much lower than the 'reserve price' fixed by the government. From this it has become clear that there is a huge gap between the price the government is demanding and the price the market is willing to pay.
Another major reason for the delay in the sale process of IDBI Bank is its recent business results. IDBI Bank's March 2026 quarter results, which came on Thursday, were weaker than market expectations. The bank's standalone net profit has fallen by more than 5% year-on-year to ₹1943.17 crore. Although the total income of the bank has increased by 4% to ₹ 9409.45 crore, this decline in profit has further increased the uncertainty regarding the timing of the bank's disinvestment and its true value.
On the other hand, the results of Kotak Mahindra Bank which has walked away from this deal have been very strong. Kotak Bank's net profit has jumped by a massive 13.4% to ₹4,026.55 crore, and their Net Interest Income (NII) has also increased by 8.1% to ₹7,876 crore.
