Harsh

Mr Goyal You have the audacity to say this nonsense after inking the most anti-India trade deal with the US? You have some nerve!

November 1 Protest wherever you are However you feel like Together we will roar and rise!

The Leader of the Opposition, @RahulGandhi, has raised the issue of the dodgy sale of IDBI Bank. For anyone who needs a refresher on the IDBI Bank sale - which smacks of crony capitalism-read on. ▪️IDBI Bank was sold to Canada-based Fairfax Financial Holdings for Rs 52,878 crore at Rs 81 per share ▪️The sale happened after rules were changed mid-process and at a much lower price than the original reserve price of ₹94.42, which was discarded ▪️Initial sealed bids from Fairfax and another entity were below the minimum reserve price of Rs 94.42. Fairfax bids came at Rs 75 ▪️Core Group of Secretaries on Disinvestment changed valuation method, asked Fairfax and another bidder to give new bids ▪️Fairfax revised bid to Rs 81 per share, still well below the original reserve price of Rs 94.42 ▪️Modi govt accepted it and also gave some relief on disputed tax claims on IDBI Bank ▪️In January 2019, LIC infused Rs 21,624 crore in IDBI when the bank was placed under the RBI’s strict Prompt Corrective Action framework ▪️LIC’s investment was at an average of ~₹61 per share to acquire a 51% controlling stake ▪️Later that year, LIC pumped in another ₹4,743 crore ▪️LIC’s investment required a special exemption from IRDAI, because normal rules cap an insurer’s stake in a listed company at 15% ▪️Over ₹26,000 crore of policyholders’ savings was used and locked up for years to clean the balance sheet and rescue IDBI Bank, only so that it could be stealthily sold ▪️The govt and LIC have been reduced to minority holders with no board seats ▪️Modi Govt’s internal note says this sale was necessary because the govt is under fiscal stress due to high energy prices, lack of FDI inflows and the falling Rupee ▪️The justification for the change of rules and methodology was made by citing General Financial Rules for the sale of government physical assets (not shares) ▪️It cited the Railway Stores Code on auctioning scrap: "Bids lower than the reserve prices may, however, be accepted by the Depot Officer where found expedient provided the Depot Officer doing so records his reasons in writing." ▪️IDBI Bank’s Gross NPA was at 31.78% in September 2018. The bank posted losses for 13 consecutive quarters accumulating to about ₹41,800 crore ▪️IDBI Bank entered RBI’s PCA in May 2017 and exited PCA on 10 March 2021 after the December 2020 results showed a turnaround ▪️IDBI Bank’s FY25 profit: ₹7,515 crore FY26 profit: ₹9,513 crore• Total business crossed ₹6.27 lakh crore by September 2026 ▪️▪️But the questions that remain unanswered: 🔺Why did the govt change the bidding rules after shortlisting and opening sealed bids, without starting the process from scratch? 🔺New bidders might have wanted to participate under the changed rules, why were they denied a chance? 🔺Why was the second bidder’s identity kept hidden on national-security grounds? 🔺Why should policyholders’ savings be used to clean up assets which are then monetised and made to appear like a distress exit than a transparent market sale? 🔺Finally, why must a bank which has turned profitable be sold at much lower valuation - actually sold at all? ▪️▪️The IDBI sale proves yet again that public and policyholder money absorbs the losses, revives the asset which is then cleaned up and sold without transparency to a bidder of govt’s choice - keeping norms at bay and changing rules midway. It also raises the important question of why must an asset which has turned profitable be sold, especially at lower valuation? Source: BusinessWorld’s investigative report by Palak Shah