India’s finance ministry responded to objections over reducing the government’s IDBI Bank holding by citing the 2003 law and a 2018 court judgment. It said Parliament had rejected a proposed restriction. The clarification followed approval of a Fairfax subsidiary as buyer of a 60.72 per cent stake; it announced neither completion nor fresh judicial approval.
India’s finance ministry said on 17 October that no legal provision prohibits reducing the government’s holding in IDBI Bank, an Indian lender. The clarification followed media reports questioning the implications of parliamentary discussions in 2003. The ministry said a proposed amendment restricting stake dilution had been rejected during those discussions and therefore never became part of the enacted law.[1], [2]
The Delhi High Court judgment cited by the ministry dates from 17 December 2018. That litigation concerned a bank officers’ association’s challenge to life insurer LIC taking control of the bank. The court dismissed the petition and found no prohibition in the legislation against reducing or divesting the government holding.[1]
In the ministry’s account of the judgment, statements during parliamentary debates could not insert such a restriction into the enacted law. The clarification also referred to the 2021 Budget, which identified IDBI among planned strategic disinvestment transactions.[1]
Before the clarification, the Cabinet had approved a subsidiary of financial group Fairfax Financial Holdings as buyer of a 60.72 per cent holding. Under the previously announced transaction, the government is selling 30.48 per cent and LIC 30.24 per cent, leaving holdings of 15 per cent and 19 per cent respectively. The new statement addresses the legal basis for dilution; it announces neither completion nor a new court ruling on the Fairfax transaction.[1]
