IDBI Bank Employees' Forum Opposes Majority Stake Sale To Fairfax, Seeks Parliamentary Review

United Forum of IDBI Officers and Employees on Thursday opposed the proposed sale of a majority stake in IDBI Bank to Canada-based Fairfax, demanding an immediate suspension of the process and a comprehensive review under parliamentary scrutiny.

The Forum considers the present decision ill-timed and inadequately justified. Volatile market conditions demand caution, transparent valuation and wider public deliberation.

"We are seriously concerned that the transaction may undervalue IDBI’s properties, institutional capabilities, customer relationships, future earnings and strategic importance," United Forum of IDBI Officers & Employees Convener Devidas Tuljapurkar said at a national convention on IDBI privatisation here.

The government must disclose the valuation methodology, underlying assumptions, treatment of real estate and other assets, and the basis for accepting the sale consideration, he said, adding that the public deserves evidence that a national asset is not being transferred at a throwaway price.

The proposed purchaser’s ownership structure, financial strength, regulatory record and any substantiated controversies in its home jurisdiction must also be subjected to transparent scrutiny, he said.

Regulatory approval cannot substitute for public accountability over the transfer of control of a major Indian bank, he added.

The Forum regards this decision as a betrayal of the parliamentary assurance associated with IDBI’s conversion into a banking company, when the then Finance Minister, Jaswant Singh, assured Parliament that Government shareholding would remain at least 51 per cent.

The Government owes Parliament and the people an explanation of how the present decision honours that commitment, he said.

The proposed transfer also raises fundamental concerns about the social content of banking, Tuljapurkar said, adding that reservation, opportunities for historically disadvantaged communities, employment security, financial inclusion and development-oriented lending must not be weakened in pursuit of private returns.

IDBI Bank has on its rolls 19,108 employees, including 9,500 employees belonging to SC, ST and OBC categories.

It has 6,911 women employees and 884 differently abled employees.

The Central government and LIC hold 45.48 per cent and 49.24 per cent equity shares, respectively, in IDBI Bank.

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 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).