Rahul Gandhi backs IDBI employees, questions sale of profitable bank to Fairfax

• Rahul Gandhi has backed IDBI Bank employees opposing its privatisation, questioning the sale of a bank that earned over Rs 9,000 crore in profit last year

• He raised concerns over reservation, service conditions and a parliamentary assurance that the government would retain at least 50 per cent ownership

• DIPAM has defended the bidding process, saying the reserve price remained unchanged and the second round followed an authorised procedure

Congress leader Rahul Gandhi has questioned the government’s decision to sell a controlling stake in IDBI Bank to Canada’s Fairfax Financial Holdings, expressing support for employees opposing the privatisation of the profitable lender.

In an open letter dated 29 October, the Leader of Opposition in the Lok Sabha argued that public banks serve a nation-building purpose and should not be treated merely as assets available for sale.

Gandhi recalled meeting a group of IDBI employees at Parliament House in March last year. They had asked why the government wanted to sell a bank whose financial recovery they had helped deliver.

He said he subsequently raised the matter in the Lok Sabha, seeking an explanation for the sale and safeguards for employees and depositors, but received no justification from the government.

Tracing IDBI’s origins as a development finance institution, Rahul Gandhi credited employees with steering it through a difficult transition into commercial banking. The bank, which was making losses seven years ago, earned more than Rs 9,000 crore in profit last year, he noted.

“That turnaround is your work,” he told employees.

Rahul Gandhi said an institution created with public funds belonged to the public. He pointed out that the government and Life Insurance Corporation of India together currently held about 95 per cent of IDBI Bank, with their combined ownership set to fall to around 34 per cent after the transaction.

He also referred to an assurance given to Parliament in 2003 that the government would retain at least 50 per cent ownership of IDBI. Although that commitment might not have been incorporated into law, he argued that an assurance to Parliament carried an obligation to the people.

The Congress leader warned that private ownership would end reservation for Scheduled Caste, Scheduled Tribe and Other Backward Class candidates and weaken protection for employees’ service conditions.

Reiterating his party’s support for a strong public sector operating alongside private enterprise, Gandhi extended his backing to the employees’ legitimate demands.

In a post on X accompanying the letter, he contrasted IDBI’s establishment to support industrial development under Congress with its proposed sale under the Narendra Modi government.

His intervention came a day after the Department of Investment and Public Asset Management issued a clarification defending the disinvestment process amid questions over the bank’s valuation and Fairfax’s bid.

DIPAM said the second bidding round followed a procedure drawn up by the Core Group of Secretaries on Disinvestment. The group had been authorised by the Cabinet Committee on Economic Affairs to resolve procedural matters and deviations.

According to the department, bids received during the initial round in the 2025–26 financial year were not approved, bringing that round to an end. The subsequent exercise, described as the “best offer round”, proceeded under the procedure determined by the secretaries’ group.

DIPAM maintained that the reserve price had neither been raised nor lowered.

Explaining the valuation process, the department said bidders independently assessed the enterprise and submitted confidential offers without a pre-set benchmark governing their bids. Separately, independent valuation agencies assessed the bank’s fair value to help determine whether the offers were reasonable.

The resulting bid and the independent valuation could therefore differ, it said.

DIPAM also cited a provision in the Request for Proposal allowing the government to determine the next steps if the highest financial offer fell below the reserve price. Qualified bidders could not subsequently challenge that decision under the provision.

The government approved the sale of a 60.72 per cent stake in IDBI Bank to Fairfax on 14 October for approximately Rs 53,000 crore.

The transaction covers the government’s 30.48 per cent stake, valued at about Rs 26,620 crore, and LIC’s 30.24 per cent holding, valued at roughly Rs 26,440 crore.

Fairfax, led by Canadian billionaire Prem Watsa, will pay Rs 81 a share, compared with the fair value of Rs 75.99 a share determined by two independent valuation agencies.

The transaction is expected to conclude by the end of the current financial year, subject to regulatory clearance from the Reserve Bank of India.

With PTI inputs