Former Bureaucrat Urges President to Review IDBI Bank Sale to Fairfax

Former bureaucrat and activist EAS Sarma has written to the President of India to urge a review of the government's plan to sell its stake in IDBI Bank. IDBI Bank shares closed 2.23 percent lower at ₹84.12 apiece on Monday following the reports. Sarma argued in his letter that the social costs of the sale outweigh the benefits. He noted that the President holds shares worth ₹4,50,740 crore across 475 Central Public Sector Enterprises that together employ over 780,000 people and distribute large annual dividends. Sarma called for an independent inquiry into the deal's legality and asked that the decision to hand IDBI Bank's management to Fairfax be put on hold. The government has approved selling a 60.72 percent stake in IDBI Bank to Canada-based Fairfax Financial Holdings for about ₹53,000 crore. This includes the central government's 30.48 percent stake and Life Insurance Corporation's 30.24 percent stake, priced at ₹81 per share. Market analysts point out that the deal could improve long-term efficiency and governance, though short-term stock volatility and a potential merger with CSB Bank remain key factors for investors to watch.

Context

Privatisation of public sector banks involves transferring majority ownership and management control to private entities, which sparks ongoing debate over public asset stewardship versus operational efficiency. Major stake sales in state-backed financial institutions require multiple regulatory approvals and careful evaluation by minority shareholders and market experts.