New Delhi: Leader of the Opposition in the Lok Sabha Rahul Gandhi has expressed solidarity with the employees of IDBI Bank and questioned the Union government's decision to sell a majority stake in the lender to Canada's Fairfax Financial Holdings.
In an open letter to bank employees dated October 29, he argued that a profitable public bank should not be sold, and warned that privatisation could weaken job protections and end reservation for disadvantaged communities in recruitment.
Gandhi said the employees themselves had raised the central question in the dispute. A group of IDBI Bank employees met him at Parliament House in March last year and asked why the government wanted to sell a bank they had helped turn around. He said he carried that question into the Lok Sabha, asking why a profitable public bank was being sold and how its employees and depositors would be protected.
In his letter, he said the government gave no satisfactory reason at the time, and has now decided to proceed with the sale to Fairfax.
The letter traces the bank's recent history as a story of recovery achieved by its workforce. Seven years ago, Gandhi wrote, IDBI was losing money. Last year, it earned a profit of more than Rs 9,000 crore. According to the bank's own financial results, net profit rose to Rs 9,513 crore in 2025-26, up from Rs 7,515 crore in the previous year. Gandhi credited the turnaround directly to the employees, telling them in the letter that the recovery was their work.
At the heart of Gandhi's argument is a view of public sector banks as instruments of national development rather than commercial assets to be disposed of. He wrote that an institution built with public money belongs to the public, and that public banks should be treated as tools for building the nation.
This framing goes beyond the specific transaction and speaks to a broader debate in India about the role of the state in banking, the purpose of disinvestment, and the balance between fiscal goals and public ownership.
The transaction at issue was approved by the Cabinet Committee on Economic Affairs on October 14. Under the deal, a subsidiary of Fairfax Financial Holdings will acquire a 60.72 per cent stake in IDBI Bank for Rs 52,878.08 crore. The government will sell a 30.48 per cent stake, valued at about Rs 26,620 crore, while the Life Insurance Corporation of India will divest 30.24 per cent, valued at about Rs 26,440 crore.
Fairfax, led by Canadian billionaire Prem Watsa, will pay Rs 81 per share, which is higher than the benchmark fair value of Rs 75.99 per share determined by two independent valuation agencies.
Once the sale is completed, the ownership structure of the bank will change sharply. At present, the government and LIC together own about 95 per cent of IDBI Bank. After the transaction, the Centre will retain 15 per cent and LIC 19 per cent, taking their combined holding to 34 per cent, and both will become public shareholders and withdraw their nominees from the bank's board.
The deal, if completed, would be the largest foreign investment in an Indian bank and a major milestone in the country's long-delayed banking privatisation programme. It is expected to be completed by the end of the current financial year, subject to regulatory clearance from the Reserve Bank of India.
Gandhi also pointed to a parliamentary assurance given in 2003 that the government would always hold at least 50 per cent of IDBI. He argued that such a promise, even if it was not written into law, carried moral and political weight. In his words, a promise made to Parliament is a promise made to the people of India.
Supporters of the sale, by contrast, are likely to argue that governments must be free to revisit past assurances in changed economic circumstances, and that disinvestment decisions are taken on the basis of current fiscal and strategic considerations.
The most immediate concern raised in the letter relates to employees. Gandhi warned that once IDBI is privately owned, reservation for Scheduled Caste, Scheduled Tribe and Other Backward Class candidates would go with it, and service conditions that have already been weakened would lose their last protection.
This is a central plank of the employees' opposition, and it explains why the issue has resonated beyond banking circles into a wider debate about affirmative action and job security in public institutions.
The employees' organisations have already signalled their opposition in concrete terms. The United Forum of IDBI Officers and Employees, comprising the All India IDBI Officers' Association and the All India Industrial Development Bank Employees' Association, has issued a strike notice opposing the proposed sale and has planned a two-day nationwide hunger strike on November 2 and 3.
The forum has demanded that the government acquire at least another 6 per cent stake in the bank to restore its majority holding, and has sought statutory protection for service conditions, pension benefits, welfare measures and reservation policies.
The government, for its part, has defended the process through the Department of Investment and Public Asset Management. In a clarification issued a day before Gandhi's letter became public, DIPAM said the second round of bidding for the strategic disinvestment was conducted under a procedure determined by the Core Group of Secretaries on Disinvestment, which was empowered by the Cabinet Committee on Economic Affairs to address procedural issues.
It said the initial round of bidding, conducted in 2025-26, was not approved, after which the first round became functus officio, meaning it ceased to have further effect.
DIPAM also addressed questions about valuation. It said the reserve price was neither reduced nor increased, and that there was no pre-determined benchmark for bids, since bidders value the enterprise independently and submit their offers confidentially. Independent valuation agencies are engaged to assess the fair value of the bank, which serves as a comparator to determine the reasonableness of bids.
The bid-discovered price and the comparative valuation can therefore be above or below each other, the department said. It added that the share purchase agreement provides that the service conditions of existing employees will remain unchanged, a point also made by DIPAM Secretary Arunish Chawla in an earlier conversation, in which he said the service conditions of existing employees and pensioners would remain unchanged after the sale.
Gandhi's intervention adds political weight to the employees' campaign, but it does not by itself change the transaction. The sale has been approved at the highest level of the government, and its completion now depends on regulatory clearances and the execution of the share purchase agreement.
What the letter does is sharpen the public debate, framing the issue as a choice between two visions of banking: one in which public banks are retained as instruments of development and social justice, and another in which the state exits commercial banking to raise resources and improve efficiency.
In a post on X tagging his letter, Gandhi drew a sharp contrast between eras. He wrote that during the Congress's time, IDBI was established to build the nation's industry, while during the present government's time, first the bidding was seen and then the price was set. He added that during the Congress's time, banks were being created, while now they are being sold, and declared his support for the bank's employees.
The language is political, but the underlying questions it raises about ownership, employment and reservation are likely to remain at the centre of the debate as the transaction moves towards completion.
(Reporting based on Business Standard and National Herald.)