Government says 2003 IDBI law contains no bar on stake dilution

NEW DELHI: The government has clarified that the IDBI (Repeal) Act, 2003 contains no provision preventing it from reducing or divesting its shareholding in IDBI Bank.

Responding to media reports on the legislative developments surrounding its stake, the government said in a statement issued on Saturday, October 17, that an amendment seeking to restrict dilution was rejected during parliamentary proceedings in 2003 and did not become part of the enacted law.

The clarification cited the Delhi High Court’s December 17, 2018 judgment in All India IDBI Officers’ Association v. Union of India & Others, which dismissed a petition challenging the government’s decision to dilute its shareholding.

According to the statement, the court held that remarks made during parliamentary debate could not substitute or override the legislation subsequently enacted. It also found no ambiguity in the Act or any provision prohibiting the government from reducing or divesting its stake.

The court rejected reliance on promissory estoppel—the principle invoked by the petitioners to argue that earlier assurances should prevent stake dilution. It held that statements made during the legislative debate did not constitute a representation to employees on which such a claim could be sustained.

The government also referred to successive Union Budget speeches outlining its policy towards IDBI Bank.

The 2016–17 Budget said the government would consider reducing its stake below 50% as part of the bank’s transformation. The 2021–22 Budget subsequently listed IDBI Bank among the strategic disinvestment transactions proposed for completion that financial year.

The statement restates the government’s legislative and policy position; it does not announce a fresh transaction timeline or change in shareholding.