The United Forum of IDBI Officers & Employees urged the RBI to freeze the Fairfax deal until a review of the disinvestment process is complete. Published on November 15, the forum said the RBI should stop the transfer of control to 10955230 Canada Inc. to protect public interest and employees.
Raising concerns over the proposed strategic disinvestment of IDBI Bank and the transfer of management control to 10955230 Canada Inc. (parent entity of Fairfax Financial Holdings Ltd.), the United Forum of IDBI Officers & Employees (UFIOE) has urged the Reserve Bank of India (RBI) to withhold all approvals, including fit-and-proper, ownership, control, and voting-right approvals, until a comprehensive and independent examination of the disinvestment process is completed.
In a letter to RBI Governor Sanjay Malhotra, the UFIOE requested the central bank to verify and disclose the source and structure of acquisition funds, ultimate beneficial ownership, leverage, encumbrances, and all related-party arrangements.
Acquisition Measures
UFIOE office-bearers Devidas Tuljapurkar, Vithal Koteswara Rao AV, Saurav Kumar, and Ratnakar Wankhade said the RBI should impose an absolute and enforceable prohibition on the use of IDBI Bank’s deposits, assets, capital, guarantees, lending capacity, or future cash flows to finance, support, or reimburse the acquisition. The forum also opposed any future acquisition of group companies by the proposed acquirer using IDBI Bank’s existing reserves and surpluses.
The forum has sought an examination of the implications of the acquirer group’s control over CSB Bank and the proposed involvement of other group entities, citing risks related to concentration, conflicts of interest, and connected-party transactions.
It also urged the RBI to ensure binding safeguards for depositors and employees, including protection of service conditions, retirement benefits, reservation and social-justice measures, branch accessibility, priority-sector lending commitments, and legitimate trade-union rights.
Abandon Transfer
Further, the forum called upon the RBI to advise the Government of India and Life Insurance Corporation of India (LIC) to keep the disinvestment process in abeyance and, given the cumulative regulatory and public-interest concerns, abandon the proposed transfer of control to a foreign entity while retaining IDBI Bank under effective public ownership and control.
Last month, the Cabinet Committee on Economic Affairs (CCEA) approved 10955230 Canada Inc., a subsidiary of Fairfax Financial Holdings, as the strategic buyer for the acquisition of a 60.72 per cent stake in IDBI Bank, comprising 30.48 per cent held by the Government of India and 30.24 per cent held by LIC, for a consideration of Rs 52,878 crore.