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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The United Forum of IDBI officers and Employees has called the attention of the Chairperson and members of the Standing Committee on Finance in Parliament to the valuation methodology being adopted for the proposed divestment of IDBI Bank (NSE stock symbol: IDBI).IDBI is not merely a quoted equity security, the Forum said in its representation. A strategic acquirer would obtain control not just over an established banking licence but also a nationwide branch network; a significant deposit franchise; millions of customer relationships; technology infrastructure; trained manpower; institutional relationships; brand and goodwill; substantial immovable property accumulated over decades.Land, office buildingsAccordingly, the Committee should examine whether the transaction valuation adequately captures the market value, book value, replacement value, franchise value, strategic value, embedded property value, and long-term public development value. A strategic disinvestment of this nature cannot be judged only by the prevailing market price of shares.IDBI has accumulated land, office buildings, residential premises, training establishments and other immovable properties over more than six decades. Many such may have been acquired decades ago at historical costs, while current commercial value in metropolitan and prime urban locations could be substantially higher.Transaction priceIt is therefore essential to ascertain the total number of significant properties; their book value; their independently assessed current market value; their development potential; whether all such value is incorporated in the proposed transaction price; and whether independent asset valuers have been appointed.Without such an examination, there is a serious risk that a bidder could acquire not merely a profitable bank but also a valuable real estate portfolio whose latent value may subsequently be unlocked privately. Publicly accumulated property must not become an unintended windfall embedded in a strategic sale, the Forum said.Binding safeguardsOnce private control passes to a strategic investor, properties regarded as operationally surplus could be sold, leased, redeveloped, or otherwise monetised, subject to applicable law and regulatory conditions. If their current market value runs into thousands of crores, subsequent monetisation could enable the acquirer to recover a substantial proportion of the acquisition cost from assets accumulated during public ownership.The committee should therefore examine whether the proposed Share Purchase Agreement and regulatory conditions provide binding safeguards regarding the disposal of significant legacy properties; redevelopment; monetisation proceeds; related-party transactions; extraction of value by controlling shareholders; dividend distribution following major asset sales; and regulatory approval for the disposal of material assets.Legal audit neededThe Committee may also examine whether any significant IDBI properties were historically obtained through compulsory acquisition or concessional allotment based on government ownership; public purpose; development-finance functions; concessional institutional status; conditions imposed by state governments or public authorities.“We do not suggest that every such property automatically reverts upon privatisation. That would depend upon the specific title, statute, grant conditions and acquisition history. Precisely for this reason, a property-by-property legal audit is essential before the transfer of controlling ownership.” The Committee may seek details of the mode of acquisition; the acquisition statute; the original public purpose; the grant or allotment conditions; the reversion clauses; the change-of-control restrictions; and the rights, if any, of state governments or original landholders, the Forum said.Published on August 29, 2026
