Clarification on legislative developments related to government's stake in IDBI

The finance minister said in answer to questions raised in Parliament that the government has taken several legislative initiatives concerning its stake in IDBI (Industrial Development Bank of India) with the aim of strengthening the bank’s financial stability and public interest. He explained that over the past few years, multiple phased steps have been taken to convert IDBI from a public‑sector bank to a mixed public‑private form, including the adoption of a public‑private partnership (PPP) model in 2005 and a change in shareholder structure under the banks’ restructuring plan in 2019. Currently, the central government holds a 20.5% shareholding in the bank, which is considered sufficient to maintain strategic control while attracting private investors.

With respect to legislative developments, the Ministry of Finance has recently tabled a draft bill that clarifies the rights of IDBI shareholders, procedures for capital augmentation, and the terms of possible share sales. The purpose of the bill is to provide the bank’s capital structure with greater flexibility and to establish a clear legal framework for raising additional capital in the future as needed. Additionally, the Parliamentary Committee on Financial Matters has prepared a special report on the subject, stating that the government should gradually reduce its stake while strengthening partnership with private investors, so that both the bank’s competitiveness and financial health can improve. The finance minister, acknowledging this report, said the government will work in coordination with all concerned parties and will take the necessary steps to expedite the legislative process as required.