Congress seeks JPC probe into IDBI Bank sale, alleges valuation irregularities
The Hindu - Business/Economy · Published 2 November 2026 · Last updated
The proposed ₹53,000 crore sale of a 60.72% stake in IDBI Bank to Fairfax faces political and employee scrutiny over post-bid valuation cuts, leveraged buyout concerns, and executive deviation from parliamentary assurances.
Key points
- On October 14, 2026, the Union government approved the strategic disinvestment of a 60.72% stake in IDBI Bank to Canada-based Fairfax Financial Holdings for approximately ₹53,000 crore.
- The Congress demanded an immediate freeze on the sale and sought a Joint Parliamentary Committee (JPC) investigation, alleging valuation manipulation and procedural irregularities.
- The opposition cited discussions involving Fairfax Chairman Prem Watsa and President Peter Clarke indicating that the acquisition would be financed in instalments, partly using IDBI Bank's own resources.
- Scrutiny was raised over the downward revision of IDBI Bank's benchmark valuation from ₹94.42 per share before bids to ₹75 per share after bids were opened, before finalising the sale at ₹81 per share.
- Opposition leaders demanded full public disclosure of both valuation reports as well as the official identity of the second bidder in the divestment process.
- Critics questioned the rationale for divesting IDBI Bank given its financial turnaround, reporting a cumulative profit of ₹30,105 crore between 2021 and 2026, non-performing assets of around 2%, and a profit per employee of ₹49.8 lakh.
- The sale was challenged on grounds of executive deviation from an August 2003 parliamentary assurance by then Finance Minister Jaswant Singh that government holding would not drop below 51%, a position backed by the Parliamentary Standing Committee on Finance.
- Questions were raised regarding special regulatory forbearance granted to Fairfax, specifically a two-year window to dilute its promoter or controlling stake in another Indian commercial bank.
- Critics highlighted the potential undervaluation of significant fixed assets, including IDBI Bank's prime properties in Mumbai and 50 acres of land in Cyber City, Hyderabad.
- The transaction faces domestic labour pushback, highlighted by protests organised by the United Forum of IDBI Officers and Employees in Patna on November 2, 2026, alongside concerns regarding the termination of reservation-based employment.
Background
- August 2003: Then Finance Minister Jaswant Singh delivers a formal assurance on the floor of Parliament that the Central Government would maintain at least a 51% majority equity stake in IDBI Bank.
- Subsequent Parliamentary Review: The Parliamentary Standing Committee on Finance reinforces the mandate of retaining state control in IDBI Bank to preserve development banking and public credit priorities.
- 2021–2026: IDBI Bank completes an operational and financial recovery, accumulating ₹30,105 crore in net profits, reducing gross bad loans to roughly 2%, and achieving ₹49.8 lakh profit per employee.
- Initial Disinvestment Process: The Union government establishes an initial floor valuation of ₹94.42 per share before inviting formal financial bids for strategic stake sale.
- October 14, 2026: The Union Cabinet approves the offloading of a 60.72% stake in IDBI Bank to Canadian entity Fairfax Financial Holdings for approximately ₹53,000 crore, subject to regulatory clearances.
- November 2, 2026: Opposition parties raise allegations of post-bid benchmark tampering (revised down to ₹75 and sold at ₹81), while bank employee unions organise street protests in Patna demanding the immediate annulment of the privatisation deal.
UPSC relevance, Prelims facts and Mains angle for this issue are in the full SWAदेSH note.
Original report: The Hindu - Business/Economy