Suspend IDBI Bank sale to Fairfax and order an inquiry, President Droupadi Murmu urged

• The sale price of Rs 81 per share is a gross undervaluation, points out the former Secretary to the Government of India.

• The Government can raise much more revenue by increasing the tax on corporate profit from the current 19 per cent rate.

• Canadian company Fairfax already has majority of the shares in Catholic Syrian Bank while RBI rules do not permit the same promoter to control more than one bank.

EAS Sarma, the highly regarded public intellectual, is convinced that the decision to sell 60 per cent stakes in IDBI Bank is both imprudent and illegal. He has also calculated to demonstrate that the dale price of Rs 81 per share undervalues the bank. For the past three years, he points out, IDBI Bank shares have traded at around Rs 84 per share.

As reported earlier, the share was trading at Rs 93.60 on 14 October 2026 when the CCEA approved the strategic sale to the Canadian company. The Government of India and the Life Insurance Corporation of India (LIC) together hold 95 per cent of the bank’s shares.

The retired bureaucrat has raised several objections to the deal and voiced his apprehension that the DIPAM (Department of Investment and Public Asset Management) may not have apprised the CCEA of the full facts. DIPAM, he was told, was under tremendous pressure to see the deal through to help the Government to raise its revenue in the current fiscal.

That explains why the Department was at pains to change rules and methodology to re-fix the reserved price from Rs 84 per share to Rs 75 per share and enable the ‘final’ Fairfax bid of Rs 81 through.

In his communications to the finance minister and to the President, Sarma points out that the Government in fact could raise more revenue than the sale price by either delaying the sale and allowing IDBI bank to earn more profit (it has earned Rs 30,000 crore and more of profit after tax in the last five years) or the Government could increase the tax of corporate profits to raise substantially more revenue than the amount of Rs 52,000 crore that the sale of stakes in IDBI Bank would fetch.

“Considering that the average effective tax rate paid by companies earning annual profits of more than Rs 500 crore is only 18.85 per cent,  compared with 23.68 p.c. for companies earning profits of less than Rs 1 crore, the Finance Ministry could readily raise additional fiscal resources by increasing the average effective tax rate applicable to large private corporations. This would be in line with thinking at the global level,” the former GOI Secretary points out.

Among the other objections flagged by Sarma are the following:

1.   Fairfax already has a majority stake in Catholic Syrian Bank. The Reserve Bank of India does not permit the same promoter to control two banks simultaneously. Fairfax also has significant stakes in IIFL Capital Services, IIFL Finance, 5paisa Capital and Valueattics Re, spanning financial services and insurance. These interests could give rise to objections on conflicts of interest.

2.   In his letter addressed to President Droupadi Murmu, he writes, “There are 475 Central Public Sector Enterprises (CPSEs) in the country, with a total capital investment of Rs 37,12,393 crore, employing 7,81,552 persons, out of whom 4,16,118 belong to the SC/ST/OBC categories. Those CPSEs earn a net profit of Rs 3,08,674 crore annually. On behalf of the people, the President of India holds Rs 4,50,740 crore of equity holdings in those CPSEs, which, in return, declare dividends annually of the order of Rs 1,38,503 crore.” This, he writes, justifies a Presidential intervention on behalf of the people of India.

3.   IDBI has 120 properties across seven cities: 68 properties in Mumbai, 20 in Pune, nine in Chennai, seven in Ahmedabad, six in Kolkata, and five each in Delhi and Hyderabad. The 50-acre landholding in Hyderabad alone has a market value of more than Rs 13,450 crore. The cumulative value of all these properties could far exceed the Rs 52,878 crore offered by Fairfax.

4.  The Preliminary Information Memorandum (PIM) inviting Expressions of Interest (EoI) for IDBI’s disinvestment was issued in 2022. While DIPAM was dragging its feet on the disinvestment process for five years, IDBI earned profits amounting to more than 90 per cent of the projected disinvestment proceeds. Had the government waited another year, IDBI might have earned substantially more in profits than the proceeds it is now receiving from the disinvestment. This indicates that IDBI’s intrinsic value is far higher than what the disinvestment proceeds suggest.

5.   IDBI possesses several highly valuable land assets across the country. Several were acquired under the Land Acquisition Act of 1894 on the premise that the acquisition served a “public purpose”, defined in Section 3(f)(iv) as being for a company wholly owned or controlled by the government. In other words, if IDBI were to pass into the hands of a private company, these lands should revert to the government; otherwise, the transfer would imply an outright violation of that statutory provision. The bid documents make no mention of this issue.

6.   Section 5(1) of the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003, implicitly provides an assurance that the service conditions of IDBI’s employees should not be altered under any circumstances. The terms of IDBI’s disinvestment, as spelt out by DIPAM, violate that provision.

7.   Following the Reserve Bank of India’s reclassification of IDBI Bank as a private sector bank, its metropolitan and urban branches stopped providing interest subvention on Kisan Credit Card (KCC) loans to farmers in March 2019. Once the bank passes into the hands of the Canadian company, even its semi-urban and rural branches may stop lending to farmers. IDBI may also discontinue small loans under schemes such as MUDRA, PMSVANIDHI and Stand Up India, as well as education loans to students, which are normally offered without collateral.