New Delhi, October 18, 2026: The Finance Ministry has clarified that the law governing IDBI Bank does not require the Central Government to retain at least 51% ownership, addressing concerns that statements made during parliamentary discussions in 2003 could legally prevent the government from selling its shares in the bank.
In a clarification issued on October 17, the ministry cited a 2018 Delhi High Court judgment holding that statements made during parliamentary debates could not impose restrictions that were not included in the legislation ultimately enacted.
The clarification follows media reports questioning whether assurances given during discussions on the IDBI (Repeal) Act, 2003, restricted the government’s ability to reduce its shareholding in IDBI Bank.
According to the ministry, a proposal was made during the legislative process to require the Central Government to remain a majority shareholder in IDBI, holding at least 51% of its shares. However, Parliament did not accept the proposed restriction, and it did not become part of the law.
The ministry referred to the Delhi High Court’s December 17, 2018, judgment in All India IDBI Officers’ Association v. Union of India & Others, which examined whether parliamentary statements could prevent the government from reducing its ownership in the bank.
The case arose in the context of the government’s proposed reduction of its shareholding and the acquisition of a controlling stake in IDBI Bank by the Life Insurance Corporation of India (LIC).
The petitioners argued that assurances made during the legislative process created an obligation to maintain government ownership above a specified level.
The High Court rejected that argument, finding that the enacted legislation contained no provision preventing the government from reducing or transferring its shareholding in IDBI Bank.
The court also rejected the application of the legal principle of promissory estoppel, under which a party may, in certain circumstances, be prevented from withdrawing a promise on which another party has relied.
The judgment established that statements made during parliamentary proceedings could not override the provisions of legislation passed by Parliament.
The Finance Ministry also referred to earlier Union Budget announcements to demonstrate that reducing government ownership in IDBI Bank had been an established policy objective.
In the 2016–17 Union Budget, then Finance Minister Arun Jaitley said the government would consider reducing its shareholding in IDBI Bank to below 50%.
The government subsequently identified IDBI Bank for strategic disinvestment in the 2021–22 Union Budget presented by Finance Minister Nirmala Sitharaman.
According to the ministry, these announcements were consistent with the legislative framework governing the bank and the legal position affirmed by the Delhi High Court.
The latest clarification addresses whether the proposed 51% government ownership requirement discussed in Parliament in 2003 remains legally binding. The ministry’s position is that the requirement was never enacted and therefore does not restrict the government’s shareholding decisions.
However, the clarification does not announce a new sale agreement or provide fresh details about the proposed transaction’s terms, price or completion schedule.
The 2018 court judgment should also not be interpreted as a fresh judicial approval of any transaction under consideration in 2026. It is an earlier ruling cited by the ministry to explain why the 2003 legislation does not itself prevent a reduction in government ownership.
The clarification does not remove any additional regulatory or procedural requirements that may apply to a strategic disinvestment. It establishes the ministry’s position on a specific legal question: the IDBI (Repeal) Act, 2003, does not require the government to retain majority ownership of IDBI Bank.
Read also: India’s exports jump $58 billion in six months, yet faster import growth pushes trade deficit higher
