Finance Ministry defends IDBI Bank stake sale to Fairfax citing 2003 Act and 2018 Delhi High Court ruling

Key facts

• The Cabinet approved strategic disinvestment of a 60.72% stake in IDBI Bank to Canada's Fairfax Financial Holdings for about ₹53,000 crore ($5.5 billion).
• The deal is the largest foreign investment in India's financial sector so far.
• The Delhi High Court, in the All India IDBI Officers' Association v. Union of India case on December 17, 2018, held that the IDBI (Repeal) Act, 2003 contains no prohibition against reducing the government's stake in IDBI Bank.
• The court also held that the doctrine of promissory estoppel cannot be invoked based on statements made during parliamentary debates to restrict the government's power to dilute its shareholding in IDBI Bank.
• An amendment moved during the 2003 parliamentary debate to restrict dilution of the government's stake was rejected and did not form part of the enacted legislation.
• In Union Budget 2016-17, then Finance Minister Arun Jaitley said the government would consider reducing its stake in IDBI Bank to below 50 per cent.
• In Union Budget 2021-22, Finance Minister Nirmala Sitharaman said the government had worked on strategic disinvestment of IDBI Bank and other PSUs despite Covid-19.