AIBOA expressed concern that permitting a foreign investor to acquire a controlling stake in IDBI Bank could pave the way for similar investments in other public sector banks in which LIC has infused capital.
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The All India Bank Officers’ Association (AIBOA) has appealed to the President of India to intervene in the proposed divestment of IDBI Bank, contending the Centre’s decision to sell a 30 per cent stake along with an equal stake held by Life Insurance Corporation of India (LIC) to a foreign investor runs contrary to assurances given in Parliament.In a letter to the President, AIBOA General Secretary S. Nagarajan said proposed sale would dilute public ownership in a key financial institution despite the Government’s assurance in Parliament in December 2003 that it would retain at least a 51 per cent equity stake in the then Industrial Development Bank of India at all times. This was subsequently recorded by the Parliamentary Committee on Government Assurances, he noted.Custodian of banksAddressing the President as the ‘Custodian’ of public sector financial institutions and public sector undertakings, Nagarajan sought intervention to safeguard institutions created and nurtured in the public interest.Tracing the institution’s evolution, he said IDBI was established in 1964 with an initial capital of ₹300 crore to provide long-term finance to industry, before being converted into a universal bank in line with changes in the financial sector. The bank had successfully navigated major challenges, including the reverse merger process and the acquisition of the crisis-ridden United Western Bank.According to AIBOA, the parliamentary assurance assumed significance following IDBI’s transition from a development finance institution into a commercial bank. The association said it has now learnt that the Government proposes to divest a combined 60 per cent stake in the bank to Canada’s Fairfax India Holdings.Valuation issuesThe association further alleged that after prospective foreign bidders were unwilling to match the reserve price fixed by the Government towards the end of last year, the reserve price has since been lowered to facilitate the transaction. Questioning the valuation, Nagarajan said LIC had invested in IDBI Bank in January 2019 at an average price of ₹61 per share. Based on the holding period of about seven-and-a-half years, the investment should have realised at least ₹122 per share, whereas the current market price is around ₹84.50, he claimed.Strong financialsHighlighting the bank’s financial position, AIBOA said IDBI Bank reported total business of ₹5.85 lakh crore as on June 30, 2026, comprising deposits of ₹3.26 lakh crore and advances of ₹2.59 lakh crore. The loan coverage ratio is close to 100 per cent Pointing to the bank’s asset base, it states that the bank owns about 50 acres of land allotted by erstwhile Andhra Pradesh Government in 1989 at a concessional rate, where its International Training Institute is located. It said the book value of the bank’s immovable assets is around ₹40,000 crore.Banks vulnerableAIBOA expressed concern that permitting a foreign investor to acquire a controlling stake in IDBI Bank could pave the way for similar investments in other public sector banks in which LIC has infused capital. It also apprehended that employees could lose constitutional protections and service benefits under foreign ownership, citing the experience of CSB Bank, where wage revision has remained pending for a decade.Published on August 7, 2026
