CPI(M) opposes proposed privatisation of IDBI Bank

The Polit Bureau of the Communist Party of India (Marxist) has strongly opposed the Union Cabinet’s decision to approve the sale of 60.72 per cent of IDBI Bank’s shares to Fairfax Financial Holdings, Canada, and demanded that the Government stop its plans to divest its stake in public sector banks.

In a statement titled “No to Privatisation of Banks”, the CPI(M) alleged that the decision violated Reserve Bank of India (RBI) guidelines prohibiting foreign entities from holding more than 26 per cent voting rights in Indian banks. It also pointed out that Fairfax already holds a 40 per cent stake in Catholic Syrian Bank.

The party said IDBI Bank, which had suffered huge losses for five consecutive years, turned profitable after the Life Insurance Corporation of India (LIC) acquired a 51 per cent stake at the Government’s request.

The CPI(M) also raised concerns over the valuation of IDBI Bank shares, alleging that Fairfax had brought prices down from the earlier valuation to its benefit. It noted that Fairfax and its auditors had earlier been fined Rs 50 lakh amid various controversies.

The statement also cited reports that NITI Aayog had recommended privatising profitable public sector banks, including Central Bank of India and Indian Overseas Bank.

According to the CPI(M), privatisation would adversely affect social sector lending and small depositors’ interests. The party said public sector banks have a major responsibility to expand banking access for the masses and provide credit to all, especially amid rising inequality.

The CPI(M) urged the Government to desist from proceeding with its plans to divest its shareholding in public sector banks.