Pending such an enquiry, he maintained that the ongoing disinvestment of IDBI be kept in abeyance.
Similarly, earnings per share of IDBI increased from ₹2.36 in 2021-22 to ₹8.57 in 2025-26, up 3.63 times.
The average share price in 2025-26 is ₹88.52 and it is likely to improve over time.
Even compared to 2025-26 average share price, the price at which the government had concluded the transaction, i.e.
If its other urban properties were to be valued similarly, the total value of its lands would be phenomenally high, far in excess of the approved bid value of ₹52,878 crore, Sarma said.
Recent revelations in the protracted disinvestment of IDBI indicates how clumsily the Department of Investment and Public Assets Management (DIPAM) has handled the entire process, according to EA Sarma, former Secretary to Government of India.
“It is possible that there are more skeletons to be revealed yet,” Sarma noted in his latest letter addressed to the Union Finance Minister. The revelation that a Director of LIC of India that owns a pre-sale stake of 49.24 per cent sat on the board of proposed buyer Canada-based Fairfax’s subsidiary, raises concerns about a possible conflict of interest that vitiates the credibility of the disinvestment process.
Sarma reiterated his demand that an independent enquiry be instituted into the process and place its findings before Parliament and the public for a meaningful discussion on approach to disinvestment of IDBI in particular and of Central Public Sector Enterprises (CPSEs) in general. Pending such an enquiry, he maintained that the ongoing disinvestment of IDBI be kept in abeyance.
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It is fallacious to justify disinvestment of public assets in the name of improving their management and/or for raising additional fiscal resources; and all the more objectionable for the government to hand over public assets to a foreign agency. “It is laughable the government should have no trust in itself or LIC of India in managing IDBI, but instead look to a foreign firm like Fairfax that repatriates profits earned from public deposits and public investment here to a foreign country, Canada.”
Sarma recalled the Supreme Court, in a similar case, had recently observed that public bodies may “scrap auctions for better price on public assets ......such a decision is neither arbitrary nor unreasonable when guided by public interest and transparency.” DIPAM’ had issued a highly convoluted’ press release on October 14 to justify selection of Fairfax as the successful bidder for government’s and LIC’s equity.
Earlier, in a letter addressed earlier to the President of India Sarma had shared his concerns. “(DIPAM’s) experts would have arrived at that benchmark (reserve price of ₹94.42 per share on the basis of which it called for financial bids in January, 2026) as being the best indicator of the true net worth of the bank. Offers from the two foreign agencies, to which the bidding process became restricted, fell short of that reserve price.”
Improving IDBI profits
IDBI’s overall performance has been improving significantly over the years and its profits have been on the increase. Profits amounted to ₹2,439 crore in 2021-22 and jumped to ₹9,513 crore in 2025-26. During last five years, profits have added up to ₹28,746 crore, 54 per cent of the proceeds from Fairfax. Similarly, earnings per share of IDBI increased from ₹2.36 in 2021-22 to ₹8.57 in 2025-26, up 3.63 times.
Sarma sought to compared the average share price of IDBI over different time frames in the following chart:
It is clear that IDBI’s shares are getting traded higher and higher year-to-year. The average share price in 2025-26 is ₹88.52 and it is likely to improve over time. If volume-weighted average share prices are to be considered, the price increases would be much higher. Even compared to 2025-26 average share price, the price at which the government had concluded the transaction, i.e. ₹81 per share is significantly lower.
Conceptually folly idea
These comparisons show the government’s and DIPAM’s approach to selling IDBI’s equity is conceptually faulty, as the social cost of handing over control to a foreign firm is far higher than the perceived social benefit. IDBI as a development financing institution can play a more effective role in promoting societal benefit than as a company controlled by a foreign entity, Sarma said.
Considering that there was not enough competition and therefore bid offers did not match IDBI’s net worth, the government ought to have thrown open the bidding process to a wider set of bidders, including other PSU banks. Instead, it resorted to other valuation methods in a highly contrived manner to justify a reserve price that is 19.5 per cent lower than the one fixed earlier.
It is not clear whether IDBI’s net worth has been properly assessed or whether the potential value of land assets factored into the valuation while finalising the aggregate sale of 60.72 per cent of equity to the Canadian bidder. There is a 50-plus-acre land property in a highly developed area of Hyderabad, where a recent auction conducted by the Telangana state government revealed a market value of ₹269 crore per acre.
Warped, imprudent decision
On that basis, IDBI’s Hyderabad landholding alone should be valued at ₹13,450 crore. If its other urban properties were to be valued similarly, the total value of its lands would be phenomenally high, far in excess of the approved bid value of ₹52,878 crore, Sarma said.
How warped and imprudent is the government’s and DIPAM’s decision on disinvestment is best illustrated by the way the private steel company promoter, ArcelorMittal had let down South Africa in running a large steel mill, threatening large-scale disemployment and economic distress and how South Africa’s own state-backed Industrial Development Corporation agreed to bail out the mill, putting together a $607 million package.
It shows (i) that private managers of public assets can let down a government and (ii) a state-backed development finance institution, if adequately empowered and encouraged, can come to the help of the government in managing public assets in a manner that is socially more beneficial, Sarma pointed out.
Published on November 2, 2026
