IDBI Bank sale: Employees’ service conditions to remain unchanged, says DIPAM Secretary
Service conditions of IDBI Bank employees will remain unchanged after the proposed sale of the lender to Canada's Fairfax Financial Holdings, a senior government official said on Friday, seeking to allay concerns among staff and pensioners over the strategic disinvestment.
Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), said existing employees and pensioners had “nothing to fear” from the proposed sale of more than 60% of the bank's equity for ₹52,878 crore.
"As per the share purchase agreement, the service conditions of the existing employees cannot be changed, modified or altered to their disadvantage by the strategic buyer," Chawla told PTI.
His remarks come amid protests by IDBI Bank employees against the government's disinvestment plan. Bank staff have called for a strike across branches in early November, with the United Forum of Bank Unions also extending support to the proposed agitation.
Addressing concerns over retirement benefits, Chawla said a dedicated pension fund had been set aside and all commitments to pensioners would continue to be honoured.
He also clarified that IDBI Bank is not a nationalised bank and that its employees' service conditions are determined by the bank's board in consultation with employees, rather than directly by the government.
"IDBI Bank is being restructured as a going concern and even in future it will be a board-managed company. It works under the company and labour law today; it will continue to work under the company and labour law tomorrow," Chawla said.
The government and Life Insurance Corporation of India (LIC) intend to remain public shareholders in IDBI Bank after the strategic sale, with their respective equity holdings capped at 15% and without representation on the bank's board, Chawla said earlier in the week.
Following the restructuring, responsibility for managing the bank and providing additional capital whenever required would rest with the strategic buyer, he told PTI.
"Both the Government of India and LIC want to become public shareholders. To become public shareholders, you cannot hold more than 15 per cent equity. You also cannot sit on the board. Otherwise, you have the same contingent liability for the bank as a promoter has," he said.
The market regulator has also directed LIC to reduce its stake in IDBI Bank from 19% on a post-diluted basis to 15%. The reduction would increase the bank's public float by four percentage points, making additional shares available to retail investors and other public shareholders.
Last week, the government approved the sale of a combined 60.72% stake in IDBI Bank to Fairfax Financial Holdings for approximately ₹53,000 crore, or $5.5 billion.
The transaction comprises the government's 30.48% holding, valued at around ₹26,620 crore, and LIC's 30.24% stake, worth approximately ₹26,440 crore.
Fairfax, led by Canadian billionaire Prem Watsa, has offered ₹81 per share, exceeding the benchmark fair value of ₹75.99 determined by two independent valuation agencies.
The proposed transaction would represent the largest foreign investment in an Indian bank and mark a significant step in India's long-delayed banking privatisation programme.
The strategic sale is expected to be completed by the end of the current financial year, subject to regulatory approvals, including clearance from the Reserve Bank of India (RBI).
Once the transaction is completed, Fairfax will assume responsibility for running the bank and meeting its future capital requirements.
The proposed ownership change has triggered opposition from employees concerned about their service conditions and retirement benefits. The government's assurances on employment terms and pension commitments come as the bank prepares for a possible nationwide strike in early November.
For about a decade, Livemint—News Desk has been a credible source for authentic and timely news, and well-researched analysis on national news, business, personal finance, corporates, politics and geopolitics. We bring the latest updates on all the listed companies on BSE and NSE, startups, mutual funds, Union ministries, geopolitics, and untapped human interest stories from around the world, helping our readers to stay informed on the latest developments around the globe. Our Coverage Areas 1. Companies: Comprehensive news and analysis on listed and unlisted companies, corporate announcements, corporate chatter, C-suite, business trends, hiring alerts, layoffs, work-life balance, world's top billionaires and richest and more. 2. Personal finance: Insights into mutual funds, small savings schemes like - PPF, SSY, post office savings scheme, stock to watch, personal loans, credit cards, top bank FDs, real estate, income tax and more. 3. Politics: Comprehensive coverage of general elections, state elections and bypolls, Lok Sabha, Vidhan Sabha, Parliament, PMO, PIB, finance ministry, home ministry, among other union ministries and government departments. 4. National News: From metro cities like Delhi, Mumbai, and e to untapped stories from rural India, we cover human interest, health, education, crime and courts, and law and order, among other areas of public interest. 5. Economy: In-depth analysis of India's macro and micro-economic indicators like- GDP, inflation, forex, fiscal deficit, current account deficit, interest rate cycle, economic recovery, RBI circulars, indirect taxes, GST, Insolvency and Bankruptcy imports, exports and everything that impacts Indian economy. 6. Geopolitics: Well-rounded and deeply researched coverage on US News, Oval Office European Union, Ukraine Russia War, middle-east crisis, royal families and global leaders like - Donald Trump, Vladimir Putin, Kim Jong Un, Xi Jinping and premiers of other leading economies in the world. Meet the Team 1. Gulam Jeelani, Political Affairs Editor 2. Sugam Singhal, Senior Assistant Editor 3. Chanchal, Assistant Editor 4. Sanchari Ghosh, Chief Content Producer 5. Pratik Prashant Mukane, Chief Content Producer 6. Sayantani Biswas, Chief Content Producer 7. Ravi Hari, Deputy Chief Content Producer 8. Garvit Bhirani, Deputy Chief Content Producer 9. Akriti Anand, Senior Content Producer 10. Jocelyn Felix Fernandes, Senior Content Producer 11. Swastika Das Sharma, Content Producer 12. Mausam Jha, Content Producer 13. Riya R Alex, Trainee Content Producer
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More
✕
Wait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.