IDBI Bank sale row: Rahul Gandhi backs employees, FM hits back

During Congress' time, banks were being created; during Modi's time, they are being sold, Rahul Gandhi said.

New Delhi: Amid the IDBI bank disinvestment row, Congress leader Rahul Gandhi has expressed solidarity with the bank employees and questioned the government’s decision to sell off the profitable public bank to a Canadian firm.

The Leader of Opposition in the Lok Sabha asserted that public banks are not assets to be sold off, they are tools to build the nation.

In a letter addressed to members of the IDBI Bank family, Gandhi said that in March last year, a group of IDBI bank employees came to meet him in Parliament House and asked him a simple question as to why the government is selling a bank that they had made profitable.

“I took that question to the Lok Sabha. I asked why a profitable public bank was being sold and how its employees and depositors would be protected. The government gave no reason. Now it has decided to sell IDBI Bank to Fairfax, a Canadian company,” Gandhi said.

Noting that IDBI began as a pioneering development bank, he said the journey to a commercial bank has been difficult, but the employees have faced the challenges.

“Seven years ago, IDBI was losing money. Last year, it earned a profit of over nine thousand crore rupees. That turnaround is your work,” he said in his open letter to bank employees.

An institution built with public money belongs to the public, Gandhi asserted.

Today, the government and LIC own 95 per cent of this bank. After the sale, they will own 34 per cent, he pointed out in the letter dated October 29.

In 2003, the government promised Parliament that it would always hold at least 50 per cent of IDBI, he said.

“That promise may not be written into law, but a promise made to Parliament is a promise made to the people of India,” Gandhi asserted.

When IDBI is privately owned, reservation for SC, ST and OBC candidates will go with it, he said.

“Your service conditions, already weakened, will lose their last protection. The Congress has always believed in a strong public sector working alongside the private sector. Public banks are not assets to be sold off, they are tools to build the nation,” Gandhi stressed.

“You asked me to stand with you. I stand with you in your fight today, and fully support all your legitimate demands. Stay together. Stay determined,” the former Congress chief said.

Tagging his letter on X, Gandhi said, “During Congress’s time, IDBI was established to build the nation’s industry. During Modi’s time, first the bidding was seen, then the price was set.”

“During Congress’s time, banks were being created. During Modi’s time, they are being sold. I stand with the employees of IDBI Bank,” he said.

His remarks came a day after the Department of Investment and Public Asset Management (DIPAM) said the second round of bidding for strategic disinvestment of IDBI Bank was conducted under a procedure determined by the Core Group of Secretaries on Disinvestment (CGD), which was empowered by the Cabinet Committee on Economic Affairs (CCEA) to address procedural issues and deviations.

The initial round of bidding was conducted in the financial year 2025-26, but the bids were not approved, following which the first round became functus officio, or ceased to have further effect, the DIPAM said in a statement.

It added that the reserve price was neither reduced nor increased and the procedure for the second round, also referred to as the best offer round, was determined by the CGD.

Explaining the bidding mechanism, DIPAM in a clarification said there was no pre-determined benchmark for bids, as bidders independently value the enterprise and submit their offers confidentially.

Independent valuation agencies are engaged to assess the fair value of the bank, which serves as a comparator to determine the reasonableness of the bids.

“The bid discovered price and the comparative valuation can, therefore, be above or below each other,” it said.

The clarification follows questions raised by many, including the bank union, regarding IDBI Bank’s valuation and bid price by the proposed bidder Fairfax of Canada.

The Request for Proposal (RFP) also provides for a situation where the highest financial bid is lower than the reserve price. Under the provision, the government decides the further course of action, and qualified interested parties cannot subsequently question the decision.

The government on October 14 approved the sale of a 60.72 per cent stake in IDBI Bank to Canada’s Fairfax Financial Holdings for about Rs 53,000 crore (USD 5.5 billion), in what would be the largest foreign investment in an Indian bank and a major milestone in the country’s long-delayed banking privatisation drive.

Fairfax will be the strategic buyer of the government’s 30.48 per cent stake, valued at about Rs 26,620 crore, and the 30.24 per cent stake held by LIC, valued at about Rs 26,440 crore.

Canadian billionaire Prem Watsa-led Fairfax will pay Rs 81 per share, higher than the benchmark fair value of Rs 75.99 per share determined by two independent valuation agencies.

The strategic transaction of IDBI Bank is expected to be completed by the end of the current financial year, subject to regulatory clearance from the Reserve Bank of India (RBI).

Nirmala Sitharaman hits back

Union Finance Minister Nirmala Sitharaman hit back at the Rahul Gandhi over his criticism. On X, she posted, “We all know how Congress has used Banks and financial institutions as personal entities and pressured bank employees to extend loans at their whim, bypassing prudent lending norms.”

Sitharaman cited some instances from 1957 onwards, including the 1976 removal of SBI chairman RK Talwar, and claimed IDBI was forced to lend to groups linked to Congress, including Videocon, Kingfisher and ABG Shipyard. She said the National Democratic Alliance (NDA) government revived the bank with recapitalisation of over Rs 25,000 crore and that due process was followed in its strategic restructuring.

“The NDA govt led by Hon’ble Prime Minister Narendra Modi revived the IDBI bank through professionalism, prudence and recapitalisation of more than Rs 25,000 crores. The IDBI Bank is now poised for its next phase of growth. All due process has been followed in the IDBI Bank strategic restructuring, and we have already clarified this yesterday,” she said.

She also said “many more instances of scams and economic mismanagement were covered in the White Paper on the Indian Economy released in February 2024.”

Congress-era banking had a phonebook for the powerful and a rulebook for the common citizens.
The era of “connection and setting banking” is over, the Finance Minister said.

“Common people now have easy access to loans, and employees are not under pressure to extend loans over the phone calls,” she said.

(With the inputs from PTI)