The Ministry of Finance issued a clarification addressing media reports regarding legislative developments concerning the Government's shareholding in IDBI Bank. The clarification states that during discussions of the Union Budget 2003 and parliamentary debate on the IDBI (Repeal) Act, 2003, an amendment seeking to restrict dilution of the Government's stake was moved but was ultimately rejected and did not form part of the enacted legislation.
The matter was subsequently examined by the Delhi High Court in All India IDBI Officers' Association v. Union of India & Others, decided on 17 December 2018. The Court dismissed the writ petition and specifically adjudicated in paragraphs 41 and 42 that statements made before Parliament 15 years earlier in legislative debates would not preclude the Central Government from diluting its stake in IDBI Ltd. The Court held that the enacted legislation did not contain the proposed amendment, and principles of promissory estoppel were wholly inapplicable in this context. The judgment clarified there is no ambiguity in the language of the IDBI Repeal Act, 2003 and no scope to read any provision that proscribes the Government from reducing or divesting its stake.
The Government's policy towards transformation and strategic disinvestment of IDBI Bank was reiterated in successive Union Budget speeches. In the 2016-17 Budget speech, then Finance Minister Arun Jaitley stated that the process of transformation of IDBI Bank had already started and the Government would consider reducing its stake to below 50%. In the 2021-22 Budget speech, then Finance Minister Nirmala Sitharaman identified IDBI Bank among transactions that would be completed in 2021-22 as part of the strategic disinvestment program.
The legislative history, judicial pronouncement, and successive Budget speeches collectively demonstrate the evolution of the Government's policy towards strategic disinvestment of IDBI Bank, with the 2018 High Court judgment clarifying that the doctrine of promissory estoppel cannot be invoked based on parliamentary statements to restrict the Government's power to dilute its shareholding.