Rahul Gandhi Supports IDBI Bank Employees, Raises Concerns Over Proposed Sale to Canada's Fairfax

Congress leader Rahul Gandhi has voiced support for IDBI Bank employees amid the proposed disinvestment of the public sector lender, questioning the Centre’s decision to transfer a controlling stake in the profitable bank to Canada-based Fairfax Financial Holdings. In an open letter addressed to IDBI Bank employees, the Leader of Opposition in the Lok Sabha argued that public sector banks are not merely financial assets that can be sold but institutions established to support the country's economic development.

Gandhi recalled meeting a group of IDBI Bank employees at Parliament House in March last year. During the meeting, the employees questioned why the government was planning to sell a bank that had successfully returned to profitability. He said he subsequently raised the issue in the Lok Sabha, seeking an explanation for the proposed sale and assurances regarding the interests of employees and depositors. According to Gandhi, the government failed to provide satisfactory answers.

Highlighting the bank's financial recovery, Gandhi said IDBI had been making losses seven years ago but reported profits exceeding Rs 9,000 crore last year. He credited the turnaround to the efforts and commitment of its employees, describing their achievement as an example of how public institutions can overcome difficult circumstances. He also questioned the government's decision to reduce its ownership in the bank. At present, the government and Life Insurance Corporation of India (LIC) together hold approximately 95 per cent of IDBI Bank. Following the proposed transaction, their combined shareholding will fall to around 34 per cent.

Gandhi further referred to a commitment made by the government in Parliament in 2003 to retain at least a 50 per cent stake in IDBI. He maintained that although the assurance may not have been incorporated into legislation, a commitment made to Parliament carries an obligation towards the people. The Congress leader also raised concerns about the potential consequences of privatisation for employees, particularly regarding reservations for Scheduled Castes, Scheduled Tribes and Other Backward Classes. He warned that existing protections and service conditions could face further uncertainty once the bank moves into private ownership.

Reiterating the Congress party's position on the public sector, Gandhi said public and private institutions should operate alongside each other, with public banks continuing to play an important role in nation-building. He expressed full support for the employees' legitimate demands and urged them to remain united in their efforts. Gandhi contrasted the Congress and BJP governments' approaches to public banking. He said the Congress period focused on establishing financial institutions to support industrial development, whereas the current government was pursuing the sale of existing public sector banks.

His comments came amid growing questions from IDBI Bank employee unions and other stakeholders over the valuation and bidding process for the proposed disinvestment. Responding to the concerns, the Department of Investment and Public Asset Management (DIPAM) clarified that the second round of bidding was conducted under a procedure established by the Core Group of Secretaries on Disinvestment (CGD), which had been authorised by the Cabinet Committee on Economic Affairs to resolve procedural matters and deviations.

DIPAM explained that the first bidding exercise, undertaken during the 2025-26 financial year, was not approved. Consequently, that round was treated as having concluded without further effect, and a fresh process was initiated. The department maintained that the bank's reserve price had not been revised upwards or downwards and that the second exercise, described as the best offer round, followed the procedure determined by the CGD. Addressing questions about the valuation, DIPAM said there was no fixed benchmark that bidders were required to match. Interested parties independently assess the bank's value before submitting confidential financial offers. Independent valuation agencies separately estimate the institution's fair value, which is subsequently used to assess the reasonableness of the bids.

The department noted that the final bid price and the comparative valuation arrived at by independent agencies could differ, with either figure potentially being higher than the other. It also pointed out that the Request for Proposal (RFP) contains provisions for situations in which the highest financial offer falls below the reserve price. In such circumstances, the government retains the authority to determine the next course of action, and qualified bidders cannot challenge that decision at a later stage.

On October 14, the government approved the proposed sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for approximately Rs 53,000 crore, equivalent to around USD 5.5 billion. The transaction is expected to become one of the largest foreign investments in India's banking sector and represents a significant step in the country's long-pending banking privatisation programme. Under the proposed arrangement, Fairfax, led by Canadian billionaire Prem Watsa, will acquire the government's 30.48 per cent holding, valued at approximately Rs 26,620 crore, along with LIC's 30.24 per cent stake, estimated at around Rs 26,440 crore.

The proposed acquisition price stands at Rs 81 per share, above the benchmark fair value of Rs 75.99 per share calculated by two independent valuation agencies. The transaction is expected to be completed by the end of the current financial year, subject to the necessary regulatory approvals, including clearance from the Reserve Bank of India. As the disinvestment process moves forward, questions surrounding employee protections, public ownership, the bank's valuation and the future role of IDBI Bank are likely to remain central to the debate over India's banking privatisation policy.