On October 14, 2026, the Union government approved the sale of a combined 60.72% stake in IDBI Bank, held by the government and the Life Insurance Corporation of India, to a company associated with Canada’s Fairfax Financial Holdings. This clears the way for a foreign private group to acquire a majority stake and management control.This decision cannot be viewed merely as the sale of shares in a bank. At stake is the future of an institution built with public resources that played an important role in India’s industrial development. The decision requires scrutiny in the context of public investment, parliamentary accountability, social justice and economic sovereignty.Reversing the direction of nationalisationUnder the leadership of Indira Gandhi, 14 major private banks were nationalised in 1969, followed by another six in 1980. The objective was to ensure that banking resources served agriculture, small industries, employment generation and broader social needs, rather than remaining confined to a select group of industrial houses.IDBI was established in 1964 as a development financial institution. Initially owned by the Reserve Bank of India, its ownership was transferred to the Union government in 1976, separating the roles of regulator and owner. In 2004, IDBI was corporatised and given the status of a commercial bank.The legislation generated intense debate in both the Lok Sabha and the Rajya Sabha. The then finance minister, Jaswant Singh, assured both Houses that the Government would retain at least 51 per cent of its equity under all circumstances, thereby preserving its public sector character.Today, however, the public control expanded through nationalisation is being withdrawn. This makes the decision a historic turning point.Invoking past losses but ignoring present profitsThe principal argument advanced in support of the government’s decision is that IDBI had been in financial difficulty and required public capital for its revival. The government’s official explanation also refers to past financial assistance and expresses the expectation that private capital, technology and management will strengthen the bank.However, any decision about an institution’s future must consider its present performance alongside its past difficulties.IDBI Bank’s net profit stood at approximately Rs 1,359 crore in the financial year 2020–21. By 2025–26, it had risen to approximately Rs 9,513 crore. Its cumulative net profit over these six financial years amounts to approximately Rs 30,106 crore. This sustained increase demonstrates the transformation in the bank’s financial position.A straightforward question arises: when the bank was in difficulty, the public sector assumed responsibility for its revival. Why, then, should control over its future earnings be transferred to a private group once it has become profitable?Recapitalisation is not merely expenditure; it is public investment in an institution’s recovery. Its assessment must therefore include dividends, future profits, lending capacity and social returns.The public bears the risk, while private capital receives the opportunities created by revival. This is precisely what is meant by “nationalisation of losses and privatisation of profits.”Also read: A Decade of Write-Offs: How the Govt and Banks Failed to Tackle NPAs and Helped Big CorporationsPublic banks cannot be valued by profits aloneA public bank’s value cannot be confined to its profit and loss account. Its social role is equally important.Jan Dhan accounts, Jeevan Jyoti insurance, Suraksha insurance, Atal Pension Yojana, Mudra loans, SVANidhi for street vendors, crop loans for farmers and direct transfers of welfare benefits all require an extensive, reliable banking network accessible to ordinary people.Public sector banks account for more than 90% of the implementation of each of these schemes. Yet the fundamental question goes beyond numbers: who will provide services in less profitable rural areas? Who will devote time to low-income customers? Who will help a small farmer or a new entrepreneur develop creditworthiness?Private banks, too, are subject to regulatory requirements and priority sector lending obligations. Nevertheless, public ownership gives the government a direct institutional instrument for pursuing social objectives. The government must explain how reducing public control will affect this capacity.If the argument used for IDBI today is applied to other public sector banks tomorrow, what institutional foundation will remain for fulfilling the responsibilities of social banking?Private ownership does not guarantee good governanceEfficiency, modern technology and better management are repeatedly cited in support of privatisation. These are necessary, but they are not inseparably linked to private ownership. They can also be developed within public institutions.Private ownership does not guarantee freedom from malpractice, conflicts of interest or regulatory violations.On October 13, 2026, the United States Office of the Comptroller of the Currency announced a penalty of $750 million against Bank of America for violations of the Bank Secrecy Act and related regulations. The action concerned serious deficiencies in its anti-money laundering compliance framework. It demonstrates that even large private banks can suffer from serious weaknesses in oversight and accountability.The resignation of Atanu Chakraborty, chairman of HDFC Bank, India’s largest private bank, citing ethical concerns, is another recent development. ICICI Bank, Bandhan Bank, IndusInd Bank, Axis Bank and Kotak Mahindra Bank have also repeatedly attracted adverse attention over various issues during the past three or four years.Public sector banks certainly need reform. However, the claim that privatisation is the only path to reform cannot be accepted. Strong boards, transparent decision-making, adequate staffing, investment in technology and firm action against wrongdoing are all possible under public ownership.Who is accountable for the parliamentary assurance?IDBI was established in 1964 as a development financial institution. The assurance given by the then finance minister Jaswant Singh, during parliamentary discussions on its corporatisation – that the government would retain at least 51% of its equity – has once again become a central issue. Parliamentary debates and contemporary records from December 2003 underline its significance.An assurance given on the floor of parliament is not a political declaration valid only for that moment. It carries the principle of executive accountability to the legislature.The Government must therefore clarify: what is the present status of that assurance? Through what process was the policy changed? What study established the necessity of relinquishing public control?The legal dimensions of these questions require separate examination. The democratic expectation, however, is clear: a policy change of this importance should be debated thoroughly in Parliament, and the Government should explain its position before the relevant parliamentary committees.IDBI: An institutional legacy of industrial developmentIDBI’s history is not merely the history of a banking business. It is an important part of the institutional framework created to provide long-term industrial finance.Development financial institutions were needed to supply long-term capital to steel, cement, engineering and other basic industries. Large projects take time to generate returns and involve distinct risks. Financing them therefore requires a development perspective that goes beyond immediate profitability.No single institution can claim credit for all of India’s industrial achievements. Equally, the contribution of institutions such as IDBI cannot be overlooked.In assessing this legacy, buildings, land and equity must be considered alongside institutional experience, trained employees, customer relationships and the capacity to provide development-oriented financeSelf-reliance also means financial decision-making capacityThe government consistently advocates “Atmanirbhar Bharat” and self-reliance. How can this position be reconciled with transferring control of a financial institution revived through public effort to a foreign private group? Self-reliance means more than increasing domestic production and also includes the country’s capacity to decide how savings are deployed, how long-term investment is directed and which development priorities receive support.Foreign investment will remain subject to Indian laws and Reserve Bank regulation. However, regulatory oversight and public ownership perform different functions. Regulation establishes minimum obligations; public ownership provides an additional instrument for shaping the direction of development.The question, therefore, concerns the necessity of surrendering public control over an important financial institution.What about employees, reservation and customers’ interests?The implications of this transaction for employees’ service conditions, pensions, job security, trade union rights and social justice policies must be made clear.The public must also know what binding safeguards will protect rural branches, services for small account holders, reasonable service charges and credit access for disadvantaged sections. General assurances are insufficient. There must be clarity about how these protections will be incorporated into the agreement, who will monitor compliance and what action will follow any violation.Employees who contributed to the institution’s revival and customers who placed their trust in it must have a voice in discussions about its future.Reconsideration is a public-interest demandThe Government should suspend further implementation and undertake a comprehensive review of the decision. The bank’s current financial position, potential returns on public investment, the basis of its valuation and alternatives that preserve public control should be placed before Parliament for scrutiny.There should be meaningful consultation with employee unions, customers, shareholders, economists and representatives working for social justice. Options for improving capital availability, technology and management while retaining public ownership deserve equally serious examination.The IDBI issue extends beyond its employees. It concerns whose interests will guide the deployment of public savings and who will control institutions built for the country’s development.Using public money to rescue an institution and transferring its control to private capital once it becomes strong is a policy that must be questioned. The demand to preserve IDBI’s public character is a demand to defend social banking, democratic accountability and India’s economic sovereignty.Devidas Tuljapurkar is convener of the United Forum of IDBI Officers & Employees, and chairman of the Banking Education Training Research Academy (BETRA).