After selling 60.72% stake in IDBI Bank, the Finance Ministry clarified that this decision was not taken suddenly, but is part of the legal process under the 2003 law, Delhi High Court decision and budget speeches.
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The Finance Ministry on Saturday clarified the government’s decision to sell its stake in IDBI Bank. The ministry says that the decision to sell the bank has not been taken suddenly. Its preparation is part of the ongoing policy process since 2003. According to the ministry, there are indications of this process in old laws made in the Parliament, decisions of the Delhi High Court and many budget speeches of the government.
Recently, the Union Cabinet has approved the sale of 60.72 percent stake of IDBI Bank to Fairfax Financial Holdings of Canada. The value of this deal is around Rs 53,000 crore ($5.5 billion). This is considered to be the largest foreign investment ever in the Indian financial sector.
What was there in the law and the court’s decision?
According to the Finance Ministry, in 2003, when the bill to withdraw the law related to IDBI Bank was being discussed in the Parliament, an amendment was proposed to ban the government from reducing its stake. However, this proposal was rejected by the Parliament. Therefore this amendment could not become part of the law. That is, at the same time it became clear that there is no restriction in the law on reducing the government’s stake.
Delhi High Court had also clarified the same thing during the hearing of a case on 17 December 2018. This case was related to ‘All India IDBI Officers Association vs Government of India’.
The court had said that there is no such rule in the IDBI Act of 2003, which prevents the government from reducing or selling its stake in the bank.
The court had also said that the government cannot be stopped from selling the stake on the basis of previous statements made in Parliament. For this, the ‘principle of promise’ cannot be resorted to. Under this legal principle, a party can be prevented from withdrawing from its earlier promise, but the court had clarified that it cannot be applied in this case to ban the sale of the government’s stake.
Indications kept coming in budget speeches
The government also said that for the last several years, budget speeches have been mentioning about plans to make changes in IDBI Bank and reduce its stake in it.
- Budget 2016-17: The then Finance Minister Arun Jaitley had said that the process of change in IDBI Bank has started. He had also said that the government would consider the option of bringing its stake in the bank below 50 percent.
- Budget 2021-22: Finance Minister Nirmala Sitharaman had also said in her budget speech that despite the challenges posed by the Corona epidemic, the government is working on the process of selling its stake in IDBI Bank and other government companies.
According to the Finance Ministry, it is clear from these old decisions, legal provisions and announcements made in the budget that the decision to reduce the government’s stake in IDBI Bank is part of its already decided policy. The ministry says that this step is being taken as per the legal process.
(With inputs from PTI)
Source: hindi.business-standard.com
