The Government has decided to privatise IDBI Bank by this financial year. The employees of IDBI Bank have announced hunger strike in protest against privatisation of Bank. Amidst this, one more important point has come to light.
The All-India Bank Officers’ Association (AIBOA) has urged Finance Minister Nirmala Sitharaman to reconsider the proposed disinvestment of the Government and LIC stake in IDBI Bank. The association has requested the government to cancel the plan in the “larger national interest.”
S. Nagarajan, General Secretary of AIBOA, said that IDBI was earlier a development financial institution. At that time, the Government of India allotted immovable assets and land parcels to IDBI on a 99-year lease because it was a government-owned institution.
In 2005, the Industrial Development Bank of India (IDBI) merged with its subsidiary commercial banking division, IDBI Bank, to form a single entity. Later, the institution was renamed IDBI Bank. After the merger, the development financial institution gradually became a retail-focused commercial bank.
In a similar letter sent to Arunish Chawla, Secretary of DIPAM, Nagarajan said that IDBI was reportedly given valuable land in different parts of the country under the Land Acquisition Act, 1894. These lands were allotted because IDBI Bank was wholly owned by the Government of India and operated as a public sector financial institution.
AIBOA said that many of these land parcels were acquired under the Land Acquisition Act for a “public purpose.” According to Section 3(f)(iv) of the Act, land can be acquired for a company that is wholly owned or controlled by the government. The association argued that if IDBI Bank is sold to a private company, such land should return to the government. Otherwise, it may violate the provisions of the law. AIBOA also pointed out that the current bid documents do not mention this issue.
Nagarajan further said that if the immovable assets and land parcels given to the earlier IDBI are not brought back under the control of the Government of India before the disinvestment, it could lead to a questionable sale. It may also create legal complications in the future for the officials involved.
He also said that earlier there were three interested buyers for the government and LIC stake in IDBI Bank. However, now it is understood that Emirates NBD Dubai is the only eligible bidder.
Emirates NBD Dubai is majority-owned and controlled by the Government of Dubai. Its main shareholder is the Investment Corporation of Dubai, which holds a 40.92% stake, while Dubai Holding owns 14.84%.
What you think of this – should Government take back land holdings of IDBI Bank or not? Do let us know in the comments section below.
