IDBI Bank disinvestment: Govt clarifies shareholding concerns, says 2003 law does not restrict stake dilution

NEW DELHI: The finance ministry on Saturday clarified that the government’s power to dilute its stake in IDBI Bank was not restricted by the IDBI (Repeal) Act, 2003. The statement comes amid media reports on the 2003 legislative developments concerning the government’s shareholding in the bank.The ministry said that an amendment seeking to restrict the dilution of the government’s stake was moved during the Union Budget 2003 discussions and parliamentary debate on the Act, but was rejected and did not become part of the enacted legislation.The ministry cited the Delhi High Court’s December 17, 2018, judgment in All India IDBI Officers’ Association vs. Union of India and Others, which dismissed a petition challenging the government’s decision to dilute its shareholding.In paragraph 41, the court held, “This Court is of the view that the statements made before the House almost 15 years earlier, in a debate relating to a legislative activity, would not preclude the Central Government from diluting its stake in IDBI Ltd. Indisputably, the legislation enacted by the Parliament after the debate did not contain the amendment that was sought to be introduced. The statements made before the House cannot substitute or override the statue so enacted by the Parliament.”Paragraph 42 stated, “There is no ambiguity in the language of the IDBI Repeal Act, 2003 and there is no scope to read any provision into the said enactment which proscribes the Government from reducing or divesting its stake in IDBI Ltd.”The government said the ruling clarified that the doctrine of promissory estoppel could not be invoked to prevent it from reducing or divesting its stake in IDBI Bank.“The aforesaid judgment is significant as it specifically addresses the doctrine of promissory estoppel, which was relied upon in challenging the Government’s decision to dilute its shareholding. The doctrine could not be invoked to prevent the Government from reducing or divesting its stake in IDBI Ltd,” the official statement said.Budget speeches on IDBI disinvestmentThe ministry also cited Budget announcements tracing the government’s disinvestment policy. In his 2016–17 Budget speech, then finance minister Arun Jaitley said, “Our Public Sector Banks will have to be strong and competitive. The Bank Board Bureau will be operationalised during 2016-17 and a roadmap for consolidation of Public Sector Banks will be spelt out.The process of transformation of IDBI Bank has already started. Government will take it forward and also consider the option of reducing its stake to below 50%.”In the 2021–22 Budget, then finance minister Nirmala Sitharaman listed IDBI Bank among transactions targeted for completion during the year.She said, “In spite of COVID-19, we have kept working towards strategic disinvestment. A number of transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others would be completed in 2021-22. Other than IDBI Bank, we propose to take up the privatization of two Public Sector Banks and one General Insurance company in the year 2021-22. This would require legislative amendments and I propose to introduce the amendments in this Session itself.”You use AI every day. Now get your AI Quotient. Take the AIQ test.