India Finance Ministry clarifies authority to divest IDBI Bank stake

The Indian Finance Ministry has issued a clarification regarding the government’s authority to proceed with the strategic disinvestment of IDBI Bank. The ministry stated that the process of selling its stake is entirely legal and that no existing laws prevent the government from divesting its assets.

Addressing recent media reports and legal questions, the ministry noted that the legislative history of the IDBI (Repeal) Act, 2003, along with successive Union Budget speeches, demonstrates the government's evolving policy toward strategic disinvestment. It clarified that while an amendment to restrict the dilution of government shareholding was proposed during parliamentary debates in 2003, it was ultimately rejected and did not become part of the enacted law.

The ministry also referenced a December 17, 2018, Delhi High Court ruling in the case of All India IDBI Officers’ Association vs. Union of India. The court held that the doctrine of promissory estoppel cannot be used to limit the government's power to reduce its stake based on statements made during parliamentary debates. The ruling confirmed that the enacted legislation contains no prohibition against the government reducing its shareholding in IDBI Bank.