IDBI Bank divestment: Employees seek review of valuation and property assets

The United Forum of IDBI Officers and Employees has urged Parliament’s Standing Committee on Finance to examine the valuation methodology for IDBI Bank’s proposed divestment, including its land, buildings, franchise value and other legacy assets.
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NIHARIKA KULKARNI

The United Forum of IDBI officers and employees has drawn the attention of the Chairperson and members of Parliament’s Standing Committee on Finance to the valuation approach being used for the planned divestment of IDBI Bank (NSE: IDBI).

Key Takeaways

• The United Forum of IDBI Officers and Employees has asked Parliament’s Standing Committee on Finance to review the valuation methodology for IDBI Bank’s proposed divestment.
• The Forum argues a strategic buyer would gain far more than the listed share price reflects, including branch network, deposits, staff and brand equity.
• It wants the Committee to assess whether the valuation reflects market, book, replacement or strategic worth, including land and buildings.
• The submission raises concerns the current valuation approach may undervalue IDBI’s legacy assets.

IDBI is more than just a listed share, the Forum emphasized in its submission. A strategic buyer would gain not only control of an existing banking licence but also a nationwide branch network, a sizable deposit franchise, millions of customer relationships, technology infrastructure, skilled staff, institutional ties, brand equity, goodwill, and considerable immovable assets accumulated over many years.

Land, office buildings

Therefore, the Committee ought to assess whether the deal’s valuation reflects market value, book value, replacement cost, franchise worth, strategic worth, embedded property value, and long‑term public development value. Relying solely on the current share price is insufficient for such a strategic disinvestment.

Over more than six decades, IDBI has built up a portfolio that includes land, office buildings, residential premises, training centres and other immovable assets. Although many of these were purchased long ago at historic cost, their present market value in major cities and prime urban areas could be far greater.

Transaction price

Consequently, it is vital to determine the total count of significant properties, their book value, their independently assessed current market value, their development potential, whether this entire value is reflected in the proposed transaction price, and whether independent asset valuers have been engaged.

Failing to conduct this review poses a serious risk: a bidder might obtain not only a profitable bank but also a valuable real‑estate portfolio whose hidden value could later be realised privately. Publicly held property should not turn into an inadvertent gain tucked into a strategic divestment, the Forum warned.

Binding safeguards

After control shifts to a strategic investor, properties deemed operationally surplus may be sold, leased, redeveloped or otherwise monetised, in line with prevailing laws and regulations. If their present market value amounts to thousands of crores, later monetisation could allow the buyer to recoup a large share of the purchase price from assets built up during public ownership.

The Committee should therefore verify that the draft Share Purchase Agreement and associated regulatory conditions contain binding safeguards covering the disposal of major legacy assets, redevelopment, monetisation proceeds, related‑party dealings, value extraction by controlling shareholders, dividend payouts after significant asset sales, and regulatory clearance for disposing of material properties.

Legal audit needed

The Committee may also wish to investigate whether any substantial IDBI holdings were originally acquired via compulsory acquisition or concessional allotment stemming from government ownership, public purpose, development‑finance roles, concessional institutional status, or conditions set by state governments or public authorities.

We do not imply that every such property automatically reverts upon privatisation; reversion depends on the specific title, statute, grant terms and acquisition history. For this reason, a property‑by‑property legal audit is indispensable before handing over controlling ownership. The Committee could request information on the acquisition mode, the governing statute, the original public purpose, the grant or allotment conditions, any reversion clauses, change‑of‑control restrictions, and the rights, if any, of state governments or the original landholders, the Forum added.

Published on August 29, 2026