Finance ministry says 2003 Parliament debate does not bar IDBI Bank sale to Fairfax

The finance ministry on Saturday rejected the argument that a promise made in Parliament more than two decades ago stops the government from selling control of IDBI Bank, saying the amendment that would have locked in its stake was moved in Parliament in 2003 and rejected.

In a statement, the ministry said “certain sections of press and media” had commented on the legislative history of the bank. During the discussion on the Union Budget of 2003 and the debate on the IDBI (Repeal) Act, 2003, “an amendment seeking to restrict the dilution of the Government’s stake was moved but was ultimately rejected and did not form part of the enacted legislation,” it said.

The clarification comes three days after the Union Cabinet cleared the sale of a 60.72% stake in the bank to a unit of Prem Watsa’s Fairfax Financial Holdings for about ₹52,878 crore. The government is selling 30.48% and the Life Insurance Corporation of India 30.24%.

The 51% argument

Opponents of the sale say the government gave Parliament its word. In an open letter to Finance Minister Nirmala Sitharaman on 15 October, former Union secretary E A S Sarma said the Standing Committee on Finance, in its 46th report in June 2003, had recommended provisions to ensure the government’s shareholding in IDBI did not fall below 51%. He said the then finance minister gave an assurance to that effect in the Lok Sabha on 8 December 2003 and in the Rajya Sabha on 15 December 2003. Employee unions have named the minister as Jaswant Singh.

The United Forum of Bank Unions, which calls the deal “privatisation” and “foreignisation”, has cited the same assurance. It asked its members to wear black badges on Friday in protest. After the sale, the government and LIC will together hold 34%.

What the court said

The ministry rested its case on a Delhi High Court judgment of 17 December 2018 in All India IDBI Officers’ Association v. Union of India, which dismissed a challenge built on the same argument.

“The statements made before the House almost 15 years earlier, in a debate relating to a legislative activity, would not preclude the Central Government from diluting its stake in IDBI Ltd,” the court held. It added that “the principles of promissory estoppel are wholly inapplicable” and that “there is no ambiguity in the language of the IDBI Repeal Act, 2003”.

The ministry also pointed to two Budget speeches. In 2016, Arun Jaitley told Parliament the government would “consider the option of reducing its stake to below 50%”. In 2021, Sitharaman listed IDBI Bank among the strategic sales to be completed that year.

IDBI and the government's stake

1. 2003Parliament passes the IDBI (Repeal) Act; an amendment to restrict dilution of the government's stake is rejected.
2. 2016In his Budget speech, Arun Jaitley says the government will consider cutting its stake below 50%.
3. 17 Dec 2018Delhi High Court rules that statements in Parliament do not stop the Centre from diluting its stake.
4. May 2021Cabinet gives in-principle approval for strategic sale and transfer of management control.
5. 14 Oct 2026Cabinet clears sale of 60.72% to a Fairfax unit for about ₹52,878 crore.

What happens next

The buyer still has to clear the Reserve Bank of India’s checks and make an open offer to minority shareholders. The Department of Investment and Public Asset Management expects the deal to close before 31 March 2027.