17 October,2026 12:12 PM IST | New Delhi | mid-day online correspondent
Representational Image. File pic.
The Finance Ministry on Saturday issued a clarification regarding the legislative developments in 2003 concerning the government's shareholding in IDBI, and said the legislative history of the IDBI (Repeal) Act, 2003, a Delhi High Court judgement and successive Union Budget speeches reflect the evolution of its policy towards the strategic disinvestment of IDBI Bank.
"It is reiterated that during the discussions of Union Budget, 2003 and the parliamentary 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," the Finance Ministry said in a statement.
The ministry said the Delhi High Court on December 17, 2018, held that the IDBI (Repeal) Act, 2003, contained no prohibition against reducing or divesting the government's stake in IDBI Bank.
"There is no ambiguity in the language of the IDBI Repeal Act, 2003 and there is no scope to read any provision into the said enactment which proscribes the Government from reducing or divesting its stake in IDBI," the Finance Ministry cited the High Court's ruling.
It said the aforesaid judgment is significant as it specifically addresses the doctrine of promissory estoppel, which was relied upon in challenging the government's decision to dilute its shareholding.
During the Union Budget, 2003, discussions and the parliamentary debate on the IDBI (Repeal) Act, 2003, the government had moved an amendment seeking to restrict the dilution of the government's stake, according to news agency PTI.
The Delhi High Court in All India IDBI Officers' Association v. Union of India and Others said, "This Court is of the view that 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. Indisputably, the legislation enacted by the Parliament after the debate did not contain the amendment that was sought to be introduced."
Earlier this week, the Cabinet had approved strategic sale of 60.72 per cent stake in IDBI Bank to Canadian billionaire Prem Watsa-led Fairfax Financial Holdings for about Rs 53,000 crore (USD 5.5 billion). The deal is the largest foreign direct investment in India's financial sector so far.
As per the deal, the government will sell 30.48 per cent stake (for about Rs 26,620 crore) and state-run Life Insurance Corporation of India (LIC) will offload 30.24 per cent stake (for about Rs 26,440 crore).
Bank unions have opposed this move and the United Forum of Bank Unions said that in 2003 the government had assured the Parliament that it shall not hold less than 51 per cent stake in IDBI, which it claimed had been violated.
In Union Budget 2016-17, the then Finance Minister Arun Jaitley had informed that the process of transformation of IDBI Bank had started. "Government will take it forward and also consider the option of reducing its stake to below 50 per cent," he had said.
In 2021-22 Union Budget, Finance Minister Nirmala Sitharaman had said that the government has worked on strategic disinvestment of IDBI Bank and other PSUs despite the pandemic.
An Expression of Interest (EoI) for the strategic sale was floated in October 2022, and after regulatory clearances and due diligence, financial bids came in on February 6, 2026, according to PTI.
The government had put the strategic sale process on hold after the bids by both Fairfax Financial Holdings and Emirates NBD came in below the reserve price. It had restarted strategic sale process this financial year and had invited revised financial bids in July.
(With inputs from PTI)
