Finance Minister Nirmala Sitharaman credited the NDA government with reviving IDBI Bank through a ₹25,000 crore recapitalisation, contrasting it with what she described as a bad-loan crisis inherited from the UPA era. The government subsequently initiated strategic disinvestment, with LIC and the Centre together divesting their combined majority stake. IDBI Bank's turnaround — from Prompt Corrective Action framework to profitability — is now cited as a case study in public sector bank revival.

IDBI Bank's story encapsulates the full arc of India's public sector banking crisis and reform. During the UPA era, aggressive lending — particularly to infrastructure — produced a surge in non-performing assets (NPAs). IDBI Bank was placed under the RBI's Prompt Corrective Action (PCA) framework in 2017, which restricted its lending, branch expansion, and dividend payments due to high NPAs and negative return on assets.

The NDA government recapitalised IDBI Bank with ₹25,000 crore as part of a broader ₹2.11 lakh crore bank recapitalisation programme announced in 2017. In 2019, LIC acquired a 51% controlling stake in IDBI Bank, effectively making it LIC's subsidiary — a unique arrangement where an insurance giant became the promoter of a bank. This required RBI and IRDAI approvals and raised regulatory questions about the boundary between banking and insurance.

The government then announced strategic disinvestment of IDBI Bank in 2021, with the Centre and LIC together proposing to divest over 60% stake. This remains one of the most watched privatisation bids in India. For exam purposes, key angles include: the PCA framework and its exit conditions, the LIC-IDBI ownership structure, the recapitalisation mechanism (recap bonds vs. direct equity), and the ongoing disinvestment process. RBI examiners test the banking supervision angle; UPSC tests the governance and disinvestment policy angle; SEBI tests any capital market dimension of the stake sale.