Finance Ministry Clarifies 2003 Legislative Developments on IDBI Shareholding

On Saturday, the Indian government issued a clarification in New Delhi addressing recent press reports and media comments regarding legislative developments in 2003 concerning the government shareholding in IDBI Bank. The Ministry of Finance stated that the legislative history of the IDBI (Repeal) Act, 2003, along with a Delhi High Court judicial pronouncement and successive Union Budget speeches, collectively demonstrate how the government policy toward the strategic disinvestment of IDBI Bank has evolved over time.

During the Union Budget discussions in 2003 and the parliamentary debate on the IDBI (Repeal) Act, 2003, an amendment was moved to restrict the dilution of the government stake, but it was ultimately rejected and did not become part of the enacted legislation. The matter was later examined by the Delhi High Court in a December 17, 2018 decision for the case of All India IDBI Officers’ Association vs. Union of India and Others. The court dismissed the writ petition and clarified that the doctrine of promissory estoppel cannot be invoked based on statements made during parliamentary debates to restrict the government power to dilute its shareholding in IDBI Bank Ltd, as the enacted legislation contained no prohibition against reducing the stake.

The official statement highlighted that successive Union Budget speeches further reflect this trajectory. The 2016-17 budget speech by then Finance Minister Arun Jaitley noted that the transformation of IDBI Bank had started and the government would consider reducing its stake below 50 percent. Additionally, the 2021-22 budget speech by then Finance Minister Nirmala Sitharaman mentioned IDBI Bank among transactions targeted for strategic disinvestment.