Disinvestment and DIPAM: notes for bank exams

At a glance

Disinvestment is the government selling part or all of its shareholding in a public sector enterprise (PSE). A minority sale keeps the government in control; a strategic sale hands management control to a private buyer, which is privatisation. The Department of Investment and Public Asset Management (DIPAM) in the Ministry of Finance runs these sales.

Key facts

DIPAM: a department of the Ministry of Finance
Origin: Department of Disinvestment (1999), renamed DIPAM on 14 April 2016
DIPAM Secretary: Arunish Chawla
New PSE Policy: approved by the Cabinet on 4 February 2021
Strategic sectors under the 2021 policy: (1) atomic energy, space and defence; (2) transport and telecommunications; (3) power, petroleum, coal and other minerals; (4) banking, insurance and financial services
Approving body for strategic sales: Cabinet Committee on Economic Affairs (CCEA)
Budget head: proceeds are shown as "miscellaneous capital receipts" (non-debt capital receipts)
2026-27 budget estimate for miscellaneous capital receipts: ₹80,000 crore
Air India: sold to Talace (Tata Sons) for ₹18,000 crore; handed over on 27 January 2022
IDBI Bank: 60.72% to a Fairfax Financial unit at ₹81 a share (₹52,878 crore), approved 14 October 2026

How it works

Methods of disinvestment.

Method	What happens	Control
Offer for sale (OFS) through stock exchanges	Government sells a slice of shares to the market	Stays with government
IPO / follow-on offer	PSE lists or issues more shares	Stays with government
ETFs (CPSE ETF, Bharat-22)	Government sells a basket of PSE shares as a fund	Stays with government
Strategic sale	A block of shares plus management control goes to one buyer	Passes to buyer

The 2021 PSE policy. In strategic sectors the government keeps only a bare minimum presence (at the holding-company level); the other PSEs in those sectors can be privatised, merged or closed. In non-strategic sectors, PSEs are to be privatised or closed where possible.

Who does what. DIPAM manages the sale process, advisers and bids. The Department of Public Enterprises (also under the Finance Ministry since 2021) identifies PSEs for privatisation or closure in non-strategic sectors. The CCEA takes the final call. In bank deals the RBI must also approve the buyer as "fit and proper".

Timeline

1991–92: first minority stake sales of PSEs
1999: Department of Disinvestment set up
2016: renamed DIPAM (14 April)
2021: New PSE Policy (4 February); CCEA clears IDBI Bank strategic sale in principle (5 May)
2022: Air India handed over to Tata Group (27 January); LIC IPO (May)
2026: Fairfax unit approved as IDBI Bank buyer (14 October)

Recent developments

16 Oct 2026: DIPAM Secretary Arunish Chawla said the IDBI Bank sale should close by the end of FY27, subject to RBI approval. The share purchase agreement will be signed after RBI clearance, followed by an open offer to minority shareholders.
14 Oct 2026: The CCEA approved 10955230 Canada Inc. (Fairfax Financial Holdings) as buyer of 60.72% of IDBI Bank (Government 30.48%, LIC 30.24%) at ₹81 a share, or ₹52,878.08 crore. The Government keeps 15% and LIC 19%.

Exam traps

DIPAM is under the Ministry of Finance, not NITI Aayog. NITI Aayog only recommends candidates.
A minority sale (e.g. OFS) is disinvestment but not privatisation; only a strategic sale transfers control.
The Department of Disinvestment became DIPAM in 2016; it was created in 1999.
In the IDBI deal, LIC is also a seller; the stake does not come from the government alone.

Quick check

Q: Which ministry is DIPAM part of? A: Ministry of Finance.
Q: To whom was Air India sold? A: Talace Pvt Ltd, a Tata Sons company, for ₹18,000 crore.
Q: What stake in IDBI Bank was approved for sale in October 2026? A: 60.72%.

Sources

In the news

Every time this topic has appeared in our current affairs, newest first:

Week of 15–21 October 2026IDBI Bank sale: DIPAM targets completion by end-FY27, subject to RBI nod
Week of 8–14 October 2026CCEA approves sale of 60.72% of IDBI Bank to Fairfax for ₹52,878 crore