New Delhi: The government has informed Parliament that legitimate concerns of IDBI Bank's existing employees and other stakeholders have been suitably addressed through appropriate provisions made in the Share Purchase Agreement governing the lender's strategic sale.
Minister of State for Finance Pankaj Chaudhary gave the assurance in the Lok Sabha in a written reply to an un-starred question raised by Thamizhachi Thangapandian, according to a report published by BusinessLine on Friday.
The parliamentary question sought details on the current status of IDBI Bank's privatisation, whether the government had carried out specific assessments to evaluate the potential impact of the disinvestment on the bank's officers, and whether it had any plans to discuss the implications of the proposed privatisation with employees and their representatives.
The minister's reply laid out the procedural milestones of the sale while maintaining that employee interests have been safeguarded through the transaction documentation.
Tracing the journey of the divestment process, Chaudhary informed the House that the Preliminary Information Memorandum inviting Expressions of Interest from potential bidders was published on October 7, 2022. In response, multiple Expressions of Interest were received, the due diligence of which is being undertaken after security clearance by the Ministry of Home Affairs and the Reserve Bank of India's 'fit and proper' evaluation.
The reply effectively places the transaction at an advanced stage of regulatory and security scrutiny before final bids are invited.
The minister's statement in Parliament comes just days after the Union Cabinet, on October 14, approved the sale of a 60.72 per cent stake in IDBI Bank to a Canadian unit of Fairfax Financial Holdings for about Rs 53,000 crore, equivalent to roughly 5.6 billion US dollars.
Under the approved structure, Fairfax will acquire the government's 30.48 per cent stake for approximately Rs 26,620 crore and the Life Insurance Corporation of India's 30.24 per cent holding for around Rs 26,440 crore.
The transaction has been positioned by the government as a strategic restructuring of IDBI Bank as a going concern. Department of Investment and Public Asset Management Secretary Arunish Chawla, who has been steering the disinvestment process, said in media interviews this week that the employees and pensioners of the bank have nothing to fear from the change of ownership.
He said the service conditions of all existing employees are fully protected by the share purchase agreement, and the pension benefits of all existing pensioners are likewise fully protected, adding that a dedicated pension fund has been set aside for the purpose.
Chawla explained that IDBI Bank differs from other nationalised banks in that it is promoted by LIC and is run by a management appointed with the approval of the Reserve Bank of India, with service conditions even today determined by the board in consultation with employee associations. "IDBI is being restructured as a going concern," he said, adding that it will continue to be a board-run company and that the management will continue to negotiate with employees.
He said the bank's pensioners and their retirement benefits remain secure under the transaction framework.
The DIPAM Secretary further outlined the road map for completing the deal. Once the Reserve Bank of India grants its clearance to the bidder, the share purchase agreement will be signed, after which the transaction is expected to be completed during the current financial year.
After the agreement is executed, the strategic buyer will be required to make an open offer to minority shareholders, giving them the opportunity to tender their shares in line with applicable regulations. The market regulator has also directed LIC to reduce its stake in IDBI Bank from 19 per cent to 15 per cent after the divestment, a move that will enlarge the bank's public float and make more shares available to retail investors.
Officials have described the IDBI Bank restructuring as the largest strategic transaction of its kind and one that would attract the highest foreign direct investment in the banking sector. The sale process, launched in 2022, had suffered a setback earlier this year when the initial bids came in below the government's reserve price of Rs 94.42 per share set in FY26.
The bids were not approved, and the government recalibrated its approach, moving away from a market-price-based valuation in favour of methodologies intended to capture the bank's intrinsic worth. Fairfax's winning offer of Rs 81 per share stands above the benchmark fair value of Rs 75.99 determined by two independent valuation agencies.
The government's assurances, however, have met with sharp rejection from the bank's workforce. The United Forum of IDBI Officers and Employees, which describes itself as the largest employee forum at the bank with 11,900 officers and 400 workmen as members, expressed shock over the DIPAM Secretary's claim that the disinvestment had been discussed with employee associations.
In a strongly worded statement reported by BusinessLine, the forum said it was never consulted while the draft of the Share Purchase Agreement was being prepared or finalised, nor was the draft ever shared with it. "The statement of Secretary, DIPAM, is a big lie," the forum said, condemning the claim of consultation.
The forum's convenor Devidas Tuljapurkar and joint convenors Vithal Koteswara Rao and Ratnakar Wankhade said the organisation had staged dharnas at Jantar Mantar in Delhi on seven occasions to oppose the proposed sale of the bank to private and foreign players, and had submitted a memorandum to the DIPAM Secretary arguing that the sale went against the interests of the nation as well as employees.
A one-day nationwide strike was observed on August 11, 2025, in protest against the disinvestment, and several conciliation meetings were conducted before the Assistant Labour Commissioner (Central), Mumbai, and the Deputy Chief Labour Commissioner (Central), Mumbai, through 2025 and 2026.
According to the forum, DIPAM officials never discussed the matter with them directly, instead replying each time to the labour commissioners that the strategic disinvestment is a policy decision of the Government of India and a confidential process.
Earlier last month, a senior DIPAM official wrote to the Assistant Labour Commissioner-C (III) in Mumbai stating that the strategic disinvestment is a confidential process containing price-sensitive information, akin to any sale and purchase transaction of a listed company that regulation requires to be kept confidential.
Any disclosure of the terms of the disinvestment, the official warned, would vitiate the transparency and confidentiality of the bidding process and jeopardise the disinvestment itself.
The department further observed that invoking the conciliation process amounted to little more than 'forum-shopping', noting that the Supreme Court is yet to decide on a similar plea and another matter is pending before the Bombay High Court. The legal proceedings add a layer of uncertainty even as the government pushes the transaction toward its final lap.
The resistance to the sale extends beyond the bank's own workforce. The United Forum of Bank Unions, which says it represents 90 per cent of the banking workforce through seven constituent unions, has described the move as not merely privatisation but "foreignisation", and asked its members to wear black badges on October 16 in protest.
Banking and insurance employee unions have opposed the Cabinet decision since it was announced, with the United Forum of IDBI Bank Officers and Employees seeking a review of the approval on the ground that the public deserves evidence that a national asset is not being transferred at a throwaway price.
Former Union power secretary E A S Sarma has separately urged that the Cabinet Committee on Economic Affairs decision be kept in abeyance pending an independent inquiry. Sarma argued that the approved bid value needs to be examined against the bank's profitability, and contended that disinvestment would end the reservation benefits available to Scheduled Castes, Scheduled Tribes and Other Backward Classes as a public-sector entity.
He also flagged the interests of small investors and depositors, noting that as of March 31, 2026, public deposits in IDBI Bank stood at Rs 3,47,163 crore against the bank's total business of Rs 6,00,789 crore, with many savers having parked their money on the assumption of government backing.
Despite the protests, the government has signalled that the strategic restructuring of central public sector enterprises will continue, with the existing pipeline of stake sales to be taken to its logical conclusion. IDBI Bank itself, once weighed down by substantial bad loans, has undergone a significant turnaround following capital infusions, recoveries and a sustained clean-up of its loan book, returning to profitability and sharply reducing its non-performing assets.
All eyes are now on the Reserve Bank of India, whose clearance for the successful bidder is the key regulatory milestone before the share purchase agreement is signed. With the minister's parliamentary assurance that employee and stakeholder concerns have been built into the transaction documents, and the unions insisting they were never taken into confidence, the dispute over how well the workforce has been protected is set to continue even as the deal moves toward closure.
(Reporting based on BusinessLine and Moneycontrol.)