CPI(M) challenges IDBI bank sale, flags foreign ownership and valuation concerns

New Delhi, Oct 25 (UNI) The Communist Party of India (Marxist) has stepped up its opposition to the privatisation of public sector banks, questioning the union Cabinet's approval for the sale of a 60.72 per cent stake in IDBI Bank to Canada-based Fairfax Financial Holdings and alleging that the proposed transaction raises serious concerns over foreign ownership restrictions, share valuation and the future of public banking in India.

In a statement issued on Sunday, the CPI(M) Polit Bureau urged the government to abandon its plans to divest its stake in public sector banks, warning that privatisation could undermine social sector lending, weaken financial inclusion and adversely affect small depositors. The party also questioned whether the proposed acquisition was consistent with Reserve Bank of India guidelines that it cited as restricting foreign entities from holding more than 26 per cent of voting rights in Indian banks.

Pointing to Fairfax Financial Holdings' existing 40 per cent stake in Catholic Syrian Bank, the CPI(M) sought clarity on the implications of allowing the Canadian company to acquire a controlling interest in IDBI Bank. It also alleged that the bank's share valuation had been reduced from an earlier assessment to facilitate the proposed transaction, raising questions about whether the terms adequately protected public interests. The Polit Bureau further referred to what it described as controversies involving Fairfax and said the company and its auditors had previously been fined Rs 50 lakh. However, the statement did not provide further details of the penalties or explain their specific connection with the proposed IDBI Bank transaction.

Challenging the rationale for the sale, the CPI(M) argued that IDBI Bank had recovered from a prolonged period of financial distress and returned to profitability after the Life Insurance Corporation of India acquired a 51 per cent stake at the government's request. The party maintained that the bank's turnaround raised questions about the need to transfer control to a private foreign investor after public-sector support had helped restore its financial health. The proposed transaction has also revived the broader political debate over the future of state-owned lenders and the government's approach to banking-sector reforms.

The CPI(M) cited reports that the NITI Aayog had recommended the privatisation of profitable public sector banks, including Central Bank of India and Indian Overseas Bank, and warned that such a policy could erode the public banking system's ability to serve the credit needs of ordinary citizens. Arguing that public sector banks perform a social and developmental role beyond commercial profitability, the party said they were essential for extending banking services to the masses and ensuring access to affordable credit, particularly for sections of society that might otherwise struggle to obtain financing. It cautioned that transferring public banking assets into private hands could weaken lending to socially important sectors and place the interests of small depositors at risk.

The CPI(M) has demanded that the government abandon its proposed divestment of stakes in public sector banks, placing the IDBI Bank sale at the centre of a wider ideological contest over privatisation, financial-sector reform and the state's responsibility to support inclusive economic development. The party's opposition reflects its argument that the performance of banks should not be judged solely by profitability, but also by their contribution to financial inclusion, social-sector lending and the protection of depositors' interests.

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