The Finance Ministry issued a statement on October 17 clarifying that the Centre is legally allowed to dilute its stake in IDBI Bank. The ministry referenced the Delhi High Court’s December 2018 judgment in All India IDBI Officers’ Association v. Union of India, which upheld that parliamentary debates from 2003 do not prevent the government from reducing its shareholding in the bank, according to livemint.com.
The ministry explained that during the Union Budget discussions and the parliamentary debate on the IDBI (Repeal) Act, 2003, an amendment was proposed to restrict the government’s stake dilution but was rejected and did not become law. The Delhi High Court examined this issue and ruled that statements made during parliamentary debates cannot override the enacted statute, confirming the Centre’s right to dilute or divest its holdings in IDBI Bank.
This clarification comes amid ongoing plans to transform IDBI Bank, with the Finance Ministry citing budget speeches from 2017 and 2022 that referenced the bank’s restructuring. The ruling and legislative history provide a legal foundation for the government’s stake sale strategy, distinguishing it from other state-owned banks where stake dilution may face different legal or political constraints.
The Delhi High Court judgment dated December 17, 2018, remains the key legal precedent affirming the government’s ability to reduce its shareholding in IDBI Bank, as reiterated by the Finance Ministry’s official statement today.