AIBOA urges President to halt IDBI Bank divestment, cites breach of assurance

AIBOA warned that allowing a foreign entity to take a controlling share in IDBI Bank might open the door for comparable investments in other state‑run banks where LIC has put money.
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ADNAN ABIDI

The All India Bank Officers’ Association (AIBOA) has urged the President of India to step in regarding the planned sale of IDBI Bank, arguing that the government’s move to offload a 30 % stake—matched by an equal holding of Life Insurance Corporation of India (LIC)—to a foreign buyer contradicts earlier parliamentary assurances.

In his letter to the President, AIBOA General Secretary S. Nagarajan warned that the proposed transaction would reduce public ownership in a vital financial institution, even though the government had promised in Parliament in December 2003 to keep at least a 51 % share in the former Industrial Development Bank of India indefinitely. He added that this commitment was later noted by the Parliamentary Committee on Government Assurances.

Guardian of public sector banks

Calling the President the ‘Guardian’ of state‑owned financial bodies and enterprises, Nagarajan asked for action to protect institutions founded and developed for the public good.

He traced the bank’s history, noting that IDBI was set up in 1964 with an initial capital of ₹300 crore to extend long‑term financing to industry, later transformed into a universal bank to match evolving financial‑sector trends. The institution overcame significant hurdles, such as the reverse merger and the takeover of the troubled United Western Bank.

AIBOA pointed out that the parliamentary pledge gained importance after IDBI shifted from a development finance entity to a commercial bank. The association said it has learned that the government intends to sell a combined 60 % stake in the bank to Canada’s Fairfax India Holdings.

Concerns over valuation

The association also claimed that, after foreign bidders refused to meet the government‑set reserve price late last year, the reserve was reduced to enable the deal. Questioning the valuation, Nagarajan noted that LIC bought IDBI Bank shares in January 2019 at an average of ₹61 each. Over roughly seven‑and‑a‑half years, the investment ought to have yielded at least ₹122 per share, while the share now trades near ₹84.50, he said.

Sound financial position

Emphasising the bank’s financial strength, AIBOA stated that IDBI Bank recorded total business of ₹5.85 lakh crore as of June 30 2026, with deposits of ₹3.26 lakh crore and advances of ₹2.59 lakh crore. The loan‑to‑coverage ratio stands near 100 %. Pointing to its asset base, the association noted that the bank holds roughly 50 acres of land granted by the former Andhra Pradesh government in 1989 at a concessional rate, site of its International Training Institute. The book value of the bank’s immovable assets is estimated at about ₹40,000 crore.

Risk to other banks

AIBOA warned that allowing a foreign investor to take a controlling share in IDBI Bank could open the door to similar stakes in other public‑sector banks where LIC has invested. It also feared that employees might lose constitutional safeguards and service benefits under foreign control, pointing to CSB Bank, where wage revisions have been stalled for ten years.

Published on August 7, 2026