Bankers’ Unions Oppose IDBI Bank Privatisation, Seek Rollback of Stake Divestment Decision

New Delhi:  Bank unions have opposed the government’s decision to privatise IDBI Bank, alleging that the proposed stake sale to a foreign investor would undermine public sector banking and demanding a rollback of the move.

In a statement, All India Bank Employees’ Association (AINEA) said the proposed disinvestment was unwarranted, particularly as the bank had recovered from its earlier financial troubles and was registering substantial profits in recent years.

At present, the government and Life Insurance Corporation of India (LIC) together hold around a 94 per cent stake in IDBI Bank.

Cabinet Committee on Economic Affairs on Wednesday approved Canada’s Fairfax Financial Holdings proposal to acquire a 60.72 per cent stake in IDBI Bank for about Rs 53,000 crore (USD 5.5 billion).

The deal, once completed, will become the largest foreign investment in an Indian bank and a major milestone in the country’s long-delayed banking privatisation drive.

The government, however, is calling the stake sale a “strategic restructuring”, saying that the Centre and LIC will continue to hold 34 per cent together in the lender.

The unions claimed that the government had assured Parliament during the merger of IDBI with IDBI Bank that its shareholding in the lender would not fall below 51 per cent.

It alleged that the proposed privatisation was contrary to the assurance and questioned the rationale behind selling a bank that had returned to profitability.

Citing the bank’s financial performance, the union said IDBI Bank had reported net profits of Rs 5,600 crore, Rs 7,500 crore and Rs 9,500 crore over the last three years.

The bank has public deposits of around Rs 3.5 lakh crore, they said, arguing that the proposed sale would effectively transfer control over a significant pool of public savings to a foreign investor.

AIBEA also questioned the government’s commitment to Atmanirbhar Bharat, alleging that the proposed transaction amounted not merely to privatisation but also to the “foreignisation” of an important Indian bank.

It said the Cabinet had decided to sell a 60 per cent stake in the bank to Canada’s Fairfax, and argued that the move would weaken the public sector banking system.

Describing the proposed transaction as privatisation under the guise of strategic disinvestment or restructuring, the union demanded that the government withdraw its decision.

(Disclaimer: Except for the headline, this article has not been edited by HDFC Sky editorial team and is auto-generated from PTI feed.)