New Delhi [India], October 29 (ANI): The Leader of Opposition in the Lok Sabha, Rahul Gandhi, has backed IDBI Bank employees opposing the lender's proposed privatisation, warning that the sale could end reservation protections for Scheduled Castes (SC), Scheduled Tribes (ST) and Other Backwards Classes (OBC).
In a letter addressed to IDBI Bank employees on Thursday, Gandhi questioned the government's decision to sell its stake in the bank despite its financial turnaround.
He also raised concerns over employees' service conditions and recalled an assurance made by the government to Parliament in 2003 that it would retain at least 51 per cent ownership in the bank.
"When IDBI is privately owned, reservation for SC, ST and OBC candidates will go with it. Your service conditions, already weakened, will lose their last protection," Gandhi said in the letter.
He said the bank's employees had played a key role in its turnaround, pointing out that IDBI Bank had been losing money seven years ago but earned a profit of over Rs 9,000 crore last year.
Gandhi said that in March last year, a group of IDBI Bank employees had met him in Parliament House and questioned why a profitable public bank was being sold. He said he had raised the issue in the Lok Sabha and asked how the interests of employees and depositors would be protected.
The Union Cabinet on October 14 approved a deal worth Rs 52,878 crore (USD 5.56 billion) to sell a 60.72 per cent controlling stake in IDBI Bank to a subsidiary of Canada's Fairfax Financial Holdings.
Under the proposed transaction, the government will sell its 30.48 per cent stake, while Life Insurance Corporation of India (LIC) will divest 30.24 per cent. Following the sale, the government's shareholding will fall to 15 per cent and LIC's to 19 per cent.
The Cabinet Committee on Economic Affairs (CCEA) earlier in an official statement said IDBI Bank had required repeated capital infusions from the government and later LIC because of its poor financial health. On May 5, 2017, the Reserve Bank of India placed the bank under the Prompt Corrective Action framework due to its non-performing assets and losses.
After the bank's financial position improved, the RBI lifted the restrictions on March 10, 2021, subject to certain conditions and continued monitoring. The government subsequently decided to sell a controlling stake to a strategic buyer.
Gandhi said the proposed sale would reduce the government's and LIC's combined ownership from 95 per cent to 34 per cent. He also questioned the decision in light of the government's 2003 assurance to Parliament regarding majority ownership.
However, the government has said existing employees' service conditions and pension benefits will be protected after the disinvestment.
In an earlier exclusive conversation with ANI, Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said the service conditions of existing employees and pensioners would remain unchanged after the sale.
"Under the share purchase agreement, the qualified parties have also agreed that the service conditions of existing employees will remain unchanged," Chawla said, adding that a separate pension fund had been established for existing pensioners and would be fully maintained.
He said the undertakings regarding employee service conditions and pension benefits had been included in the share purchase agreement and that existing employees and pensioners should have no apprehensions.
On the valuation of the deal, Chawla said the government had appointed professional transaction, legal and valuation advisers. Two independent valuation advisers used separate, globally accepted methods to determine the bank's value.
He said only 5.3 per cent of IDBI Bank's shares were traded in the stock market, with the share price fluctuating between Rs 61 and Rs 118 over the preceding six to eight months.
One adviser used the market multiples method to compare the bank with similar enterprises, while the other assessed its assets using the audited balance sheet as of March 31, 2026, including its properties, banking licence and brand value.
According to Chawla, the average of the fair market value and fair asset value was used to determine the benchmark price. He said the winning bid was higher than the benchmark price and both independently determined fair values. (ANI)
"I stand with you in your fight": Rahul Gandhi writes to IDBI Bank employees'; criticises privatisation
