Congress Questions IDBI Bank Sale to Canadian Firm Fairfax Over Transparency and Conflict of Interest

The Congress party has raised serious questions regarding transparency and conflicts of interest surrounding the planned sale of IDBI Bank to Canadian firm Fairfax Financial Holdings.

IDBI Bank Background

Established on July 1, 1964, IDBI was envisioned by the then-finance minister T. T. Krishnamachari to support private sector financial assistance and drive India's industrial growth. It also helped create vital institutions like SIDBI, EXIM Bank, the NSE, SEBI, and NSDL. The Congress noted that the public sector bank recorded a profit of nearly ₹10,000 crore in the last financial year.

The Stake Sale

On October 14, the government approved selling a 60.72% stake in IDBI Bank to Fairfax for about ₹53,000 crore, marking a major step in the country's banking privatisation push. Congress general secretary Jairam Ramesh questioned the urgency of selling a profitable public bank and asked why its share price minimum was lowered from ₹94.42 to ₹75.99, resulting in a sale price roughly ₹8,800 crore lower than initially set.

Conflict of Interest Claims

Citing media investigations by Businessworld, Mr. Ramesh highlighted that Gurumoorthy Mahalingam served simultaneously as an independent director at LIC and on the board of Thomas Cook India, a Fairfax-controlled company, for seven months. During this period, LIC began selling its 30.24% stake in IDBI while Fairfax was a bidder, and Mr. Mahalingam was also a member of LIC's Investment Committee.

Government Defense

Finance Minister Nirmala Sitharaman rejected the criticisms, accusing the Congress of spreading lies and recalling that IDBI was left in poor shape due to past bad loans tied to prominent business groups before the NDA government revived it through recapitalisation exceeding ₹25,000 crore.

Context

Strategic disinvestment of public sector undertakings involves complex negotiations between government stakeholders, financial regulators like the Reserve Bank of India, and private investors. Public sector bank divestments often invite intense political scrutiny regarding valuation metrics, procedural transparency, and the corporate governance standards of prospective buyers.