Rahul Gandhi, Leader of the Opposition in the Lok Sabha, has criticized the Indian government's decision to sell IDBI Bank to Fairfax Financial Holdings, a Canadian firm. Gandhi questioned the rationale behind selling a profitable public bank and expressed concern over the implications for employees and depositors.
In a letter addressed to IDBI Bank employees, Gandhi highlighted the bank's transformation from a loss-making entity to a profitable one, attributing this success to the hard work of its employees. He emphasized that public banks should serve as tools for national development rather than being sold off. Gandhi recalled meeting IDBI employees in March last year, who questioned the government's decision to sell the bank they had helped turn around.
Gandhi pointed out that the government and the Life Insurance Corporation (LIC) currently own 95% of IDBI Bank, but this stake will reduce to 34% post-sale. He reminded that a 2003 parliamentary promise assured that the government would maintain at least a 50% stake in the bank, a commitment he believes should be honored.
The sale of IDBI Bank to Fairfax involves a 60.72% stake, marking the largest foreign investment in an Indian bank. Fairfax, led by Canadian billionaire Prem Watsa, will acquire the government's 30.48% stake and LIC's 30.24% stake, paying ₹81 per share, which exceeds the benchmark fair value of ₹75.99 per share set by independent valuation agencies.
Gandhi warned that privatization could lead to the loss of reservation benefits for Scheduled Castes (SC), Scheduled Tribes (ST), and Other Backward Classes (OBC) candidates. He stressed the importance of a strong public sector coexisting with the private sector and reiterated his support for the bank employees' demands.
On social media, Gandhi contrasted the Congress era, which focused on building banks, with the current government's approach of selling them. He pledged his support to IDBI Bank employees, urging them to remain united and determined.
The Department of Investment and Public Asset Management (DIPAM) clarified the bidding process, stating that the second round of bidding was conducted under the guidance of the Core Group of Secretaries on Disinvestment (CGD). The initial round in the financial year 2025-26 did not result in approved bids, leading to a second round where the reserve price remained unchanged.
DIPAM explained that independent valuation agencies assess the fair value of the bank to compare with bid prices, which can vary. The government retains the right to decide the course of action if the highest bid falls below the reserve price, and qualified parties cannot challenge this decision.
The strategic transaction is expected to conclude by the end of the current financial year, pending regulatory approval from the Reserve Bank of India (RBI).
