"I Stand With You": Rahul Gandhi Slams IDBI Bank Privatisation
Rahul Gandhi writes to IDBI Bank employees, warning that privatisation could end SC/ST/OBC reservations and weaken service conditions.
The Leader of Opposition in the Lok Sabha, Rahul Gandhi, has thrown his weight behind the employees of IDBI Bank who are protesting the government's plan to privatise the lender. In a strongly worded letter addressed to the bank's staff, Gandhi expressed his solidarity, warning that the proposed sale could lead to the erasure of critical social protections and a decline in worker security.
Concerns Over Reservations and Employee Rights
The primary point of contention for Gandhi is the impact of privatisation on social equity. He cautioned that once IDBI Bank moves into private ownership, the reservation protections for Scheduled Castes (SC), Scheduled Tribes (ST), and Other Backward Classes (OBC) would vanish.
"When IDBI is privately owned, reservation for SC, ST and OBC candidates will go with it. Your service conditions, already weakened, will lose their last protection," Gandhi stated in his letter.
Questioning the Logic of the Sale
Rahul Gandhi questioned why the government is pursuing the sale of a bank that has successfully turned its fortunes around. He highlighted the bank's financial recovery, noting that while IDBI was incurring losses seven years ago, it managed to post a profit of over Rs 9,000 crore last year.
Gandhi recalled a meeting in March of the previous year with a group of IDBI employees at Parliament House, where they questioned the rationale behind selling a profitable public sector bank. He further reminded the government of an assurance given to Parliament in 2003, wherein the government had pledged to maintain at least a 51 per cent ownership stake in the institution.
The Deal: Breaking Down the Numbers
The controversy stems from a Union Cabinet decision on October 14 to approve a deal valued at Rs 52,878 crore (USD 5.56 billion). The plan involves selling a 60.72 per cent controlling stake in IDBI Bank to a subsidiary of Canada's Fairfax Financial Holdings.
The divestment breakdown is as follows:
- Government of India: Selling its 30.48 per cent stake.
- Life Insurance Corporation of India (LIC): Divesting 30.24 per cent.
- Post-Sale Ownership: The government's share will drop to 15 per cent, and LIC's will fall to 19 per cent.
This move would see the combined ownership of the government and LIC plummet from 95 per cent to just 34 per cent.
The Government's Justification
The Cabinet Committee on Economic Affairs (CCEA) has defended the move by pointing to the bank's history of financial instability. They noted that IDBI required repeated capital injections from the government and LIC due to poor health. In 2017, the Reserve Bank of India (RBI) had placed the bank under the Prompt Corrective Action (PCA) framework due to high non-performing assets and losses, though these restrictions were lifted in March 2021.
Assurances on Employee Benefits
To quell the unrest, the government has insisted that the rights of the workforce will be safeguarded. Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), stated that the share purchase agreement explicitly ensures that the service conditions of existing employees remain unchanged.
Chawla further clarified that a separate pension fund has been established to ensure that existing pensioners are fully maintained, urging employees and pensioners to cast aside their apprehensions.
Valuation and Market Context
Addressing the valuation of the deal, Secretary Chawla mentioned that professional legal and valuation advisers were employed, using globally accepted methods. He noted the volatility of the bank's stock, which traded between Rs 61 and Rs 118 over a period of six to eight months, with only 5.3 per cent of shares being traded in the open market.