Former secretary to government EAS Sarma has written to the President of India seeking intervention in the disinvestment of Central Public Sector Enterprises (CPSEs), particularly the IDBI Bank sale. According to reports from The Hindu BusinessLine, Sarma argues that the social cost of disinvestment far exceeds perceived social benefits, and that independent inquiry should be ordered to examine the legality and prudence of disinvesting IDBI. He emphasizes that since the President holds equity shares in CPSEs on behalf of the people, direct intervention is necessary to review the disinvestment process.
The Cabinet Committee on Economic Affairs (CEA) recently approved strategic sale of IDBI Bank to Fairfax, a Canadian company, for ₹52,878 crore. As reported by The Hindu BusinessLine, IDBI Bank, established in 1964 as a development finance institution, currently operates 2,122 branches across the country and employs 19,108 people, including 9,500 from SC/ST/OBC categories. The Centre and LIC hold 45.48% and 49.24% equity shares respectively, with the sale leaving residual shareholding of 15% with the Centre and 19% with LIC. This leaves both the Centre and LIC as minority shareholders having little say in decisions on the future of IDBI.
According to the report, there are 475 Central Public Sector Enterprises (CPSEs) with total capital investment of ₹37,12,393 crore and employing 7,81,552 persons, of whom 4,16,118 belong to SC/ST/OBC categories. These CPSEs earn a net profit of ₹3,08,674 crore annually. The President holds ₹4,50,740 crore equity holdings that declare annual dividends of ₹1,38,503 crore. Sarma argues that the justification of disinvestment helping raise fiscal resources is fallacious, as private firms raise borrowings from the same national savings pool that the state can access better terms without losing ownership control. He also questions the privatisation leading to better management, citing several CPSEs functioning efficiently despite global competition.
As reported by The Hindu BusinessLine, the disinvestment process lacks transparency, with cursory information provided only in the Preliminary Information Memorandum issued on October 7, 2022. The bidding process was restricted to two foreign entities - one from UAE and another from Canada - with the Canadian bidder offering ₹81 per share against the reserve price of ₹94.42 per share. Sarma criticizes the exclusion of other PSU banks from bidding, noting that competent public sector undertakings were excluded while foreign entities were allowed to participate. He also raises concerns about the government's haste in concluding the sale, stating that IDBI would have maintained its increasing trend in profitability year after year.
According to the report, LIC's equity share in IDBI was funded by 262 million policyholders. Sarma argues that the Centre and LIC should have taken these policyholders into confidence before approving the sale, noting that they were not kept informed. As of March 31, 2026, public deposits in IDBI stood at ₹3,47,163 crore against total business of ₹6,00,789 crore. Many small investors have invested their hard-earned savings in IDBI, assuming that it has the government's backing. Privatising IDBI would imply letting them down, without their consent. Transfer of ownership and control to a foreign agency will introduce uncertainty in the future of employees, especially SC/ST/OBC employees, as the terms of disinvestment do not provide any safeguards.
