The following is the text of a letter by former IAS officer E.A.S. Sarma to Union finance minister Nirmala Sitharaman decrying the manner in which the government and LIC sold their controlling stake in IDBI Bank to the Canadian firm Fairfax and the rationale for doing so.The Department of Investment and Public Asset Management should have widened the scope of the auction after earlier bids fell short of the determined reserve price of Rs 94.42 per share instead of justifying a lower price, Sarma said. “To make light of that reserve price as soon as Fairfax offered a lower bid raises serious concerns about the propriety of the transaction,” he wrote to Sitharaman.Plus, IDBI’s performance was improving and a state-backed development finance institution such as itself can, “if adequately empowered and encouraged … come to the help of the government in managing public assets in a manner that is socially more beneficial”, said Sarma, who has served as a secretary to the finance ministry. And there were better ways to raise public money than to disinvest IDBI, he argued.Sarma demanded an independent inquiry into IDBI’s disinvestment, that its findings be presented before parliament and that the bank’s sale be put on hold until the findings are ready.§ToSmt Nirmala SitharamanUnion finance ministerDear Smt Sitharaman,I refer to my earlier letter of October 15, 2026 addressed to you on the legal, financial and ethical concerns I had against selling Centre’s share up to 30.48% and LIC’s share up to 30.24% in favour of Fairfax, a Canadian company, for a consideration of Rs 52,878 crore, leaving a residual shareholding of 15% with the Centre and 19% with LIC.Subsequently, I appealed to the president in a letter of October 18, 2026 reiterating my concerns, especially my concern at the highly opaque process of calling for financial bids for IDBI’s equity, giving one the impression that it was tailored to hasten the sale at the cost of financial prudence and transparency.In that letter, I had appealed to the president to order an independent enquiry to determine the legality and prudence of disinvesting IDBI and place the findings from that enquiry before the parliament for a discussion, not only on the disinvestment of IDBI but also on the desirability of disinvestment of other CPSEs [central public sector enterprises] as well. Pending such an enquiry, I demanded that the government should keep in abeyance the decision to hand over IDBI’s ownership and management control to Fairfax.In principle, it is fallacious for the government to justify disinvestment of public assets in the name of improving their management and/or for raising additional fiscal resources. It is all the more objectionable for the government to hand over public assets to a foreign agency, as it is the case now with the IDBI.It is laughable that the government should have no trust in itself and in the LIC in managing IDBI, but instead, have trust in a foreign firm like Fairfax that repatriates profits earned from public deposits and public investment in India to a foreign country, Canada.Please recall the highly convoluted press release issued by DIPAM [Department of Investment and Public Asset Management] on October 14, 2026 to justify the selection of Fairfax as the successful bidder for government’s and LIC’s equity. With reference to it, I had raised my concerns as follows in my letter addressed to the president:“(Dipam’s) experts would have arrived at that benchmark (reserve price of Rs 94.42 per share on the basis of which DIPAM called for financial bids in January 2026) as being the best indicator of the true net worth of the bank. Offers from the two foreign agencies, to which the bidding process became restricted, fell short of that reserve price.“At that stage, considering that there was not enough competition and therefore the bid offers did not match the net worth of IDBI, the government ought to have thrown open the bidding process to a wider set of bidders, including other PSU [public sector undertaking] banks. Instead, the government resorted to other valuation methods in a highly contrived manner to justify a reserve price that is 19.5% lower than the reserve price fixed earlier.“In response, the Canadian bidder offered Rs 81 per share, on the basis of which the government hastily finalised the aggregate sale of 60.72% of IDBI’s equity to that bidder.“It is not clear whether IDBI’s net worth has been properly assessed by the government and whether the potential value of its land assets has been factored into the valuation.“For example, there is a 50-plus-acre land property held by IDBI in a highly developed area of Hyderabad, where a recent auction conducted by the Telangana state government revealed a market value of Rs 269 crore per acre. On that basis, IDBI’s Hyderabad landholding alone should be valued at Rs 13,450 crore! If other urban properties of IDBI were to be valued similarly, the total value of its lands would be phenomenally high, far in excess of the approved bid value of Rs 52,878 crore.”More recently, a BusinessWorld investigative report revealed the internal notings of DIPAM on the way decisions were taken following the aborted bids of January 2026. That report has fully corroborated my contention, as referred above.It is ironic that the government, instead of falling back on prudence and reviewing the CCEA [Cabinet Committee on Economic Affairs] decision on disinvestment, should issue yet another press release on October 29, 2026, trying to justify the decision already taken. The justification so given is as convoluted as the earlier one, as explained below.For example, it says,“The press note dated 14.10.2026 clearly explains that there is no a-priori benchmark for bidding. The bidders do their own valuation and submit their bids in a confidential manner. Independent agencies are hired to do a fair valuation of the enterprise contemporaneously, which is then used as a comparator to assess the reasonableness of the bids submitted. The bid discovered price and the comparative valuation can, therefore, be above or below each other.“To handle this situation, provision is ex-ante built into Para 5.3.6(iii) the RFP [request for proposal]: ‘In the event the Financial Bid of the Highest Bidder is lower than the reserve price, the Gol [Government of India] will decide the further course of action and the QIPs shall not subsequently question any decision taken by the Gol in this regard’.”The intention underlying Para 5.3.6 of the RFP does not in any way give license to DIPAM to adopt a procedure that runs counter to the public interest. Had DIPAM and the government cared to appreciate the true value of IDBI and cared to ensure that the sale of government’s and LIC’s equity should yield optimal proceeds, they ought to have revoked the auction proceedings when the bids fell short of the reserve price of Rs 94.42 per share, widened the ambit of competition and called for fresh bids, not only from the short-listed bidders but also from PSU financial institutions like SBI for a more accurate price discovery.In that connection, I may mention that the Hon’ble Supreme Court, in a similar matter, recently observed that public bodies may ‘scrap auctions for better price on public assets … such a decision is neither arbitrary nor unreasonable when guided by public interest and transparency’.The RFQ [request for quotation] issued by DIPAM for IDBI in September 2023 was quite comprehensive in terms of the valuation methodology, as spelt out in Para 3.1. In particular, it laid down that IDBI’s land assets should be valued at the prevailing market value. It should be remembered that IDBI has 120 properties in seven cities: 68 properties in Mumbai, 20 in Pune, nine in Chennai, seven in Ahmedabad, six in Kolkata and five each in Delhi and Hyderabad. As referred above, the 50-acre landed property alone of IDBI has a market value of more than Rs 13,450 crore. From this, one can get a feel of the value of other properties. The cumulative value of all those properties would certainly far exceed the proceeds of Rs 52,878 crore from Fairfax!The above cited RFP was issued in September 2023. It spelt out the valuation methodology comprehensively. More than two years have since passed by. When DIPAM fixed the reserve price in January 2026 at Rs 94.42 per share, a reasonable inference to be drawn from it would be that DIPAM had followed its own guidelines scrupulously and arrived at that benchmark as the best indicator of IDBI’s value. To make light of that reserve price as soon as Fairfax offered a lower bid raises serious concerns about the propriety of the transaction.For the government and DIPAM to assume that the reserve price of Rs 94.42 per share did not reflect the true value of IDBI is far too simplistic, as IDBI’s overall performance has been improving significantly over the years and its profits have been on the increase.As already indicated, IDBI’s profits were Rs 2,439 crore in 2021-22 and the profits rapidly increased to Rs 9,513 crore in 2025-26. During the last five years, the profits add up to Rs 28,746 crore, 54% of the proceeds from Fairfax.Similarly, the earnings per share of IDBI increased from Rs 2.36 in 2021-22 to Rs 8.57 in 2025-26, representing a 3.63 times increase.I have also tried to compare the average share price of IDBI over different time frames in the following chart:It is clear that IDBI’s shares are getting traded higher and higher year-to-year. The average share price in 2025-26 was Rs 88.52 and it is likely to improve over time. If volume-weighted average share prices are to be considered, the price increases would be much higher. Even compared to the 2025-26 average share price, the price at which the government had concluded the transaction, i.e. Rs 81 per share, is significantly lower.These comparisons show that the government’s and DIPAM’s approach to selling IDBI’s equity is conceptually faulty, as the social cost of handing over control of IDBI to a foreign firm is far higher than the perceived social benefit. IDBI as a development financing institution can play a more effective role in promoting societal benefit than as a company controlled by a foreign entity. Additionally, there are serious legal objections to the proposed sale of majority equity to Fairfax, which I had dealt with in my letters addressed to you and more recently in my appeal to Rashtrapatiji.How warped and imprudent is the government’s and DIPAM’s decision on the disinvestment of IDBI is best illustrated by the way the private steel company promoter, ArcelorMittal, had let down South Africa in running a large steel mill there, threatening large-scale disemployment and economic distress and how South Africa’s own state-backed Industrial Development Corporation has agreed to bail out the sinking steel mill, putting together a $607 million financial assistance package.It shows (i) that private managers of public assets can let down a government and (ii) a state-backed development finance institution, if adequately empowered and encouraged, can come to the help of the government in managing public assets in a manner that is socially more beneficial.The revelations made by BusinessWorld as referred show that DIPAM came under intense pressure to hasten the sale of government’s and LIC’s equity in IDBI to provide fiscal relief to the government. If that were to be the case, the way the government has concluded the IDBI disinvestment process should be deemed to be all the more imprudent, as the proceeds from Fairfax are negligible compared to the annual revenue receipts of the government.Considering that the average effective rate of tax paid by companies earning more than Rs 500 crore in profits annually is only 18.85%, compared to 23.68% paid by companies earning profits less than Rs 1 crore, the finance ministry can raise additional fiscal resources readily by an upward increase in the average effective tax rate applicable to large private corporate firms, in line with the thinking at the global level. The additional fiscal resources which would accrue thus can far exceed the marginal resources raised from CPSE disinvestment.Just now, I have come across yet another revelation from an investigative report from BusinessWorld that indicates an LIC director sat on Fairfax subsidiary’s board while LIC was selling IDBI to Fairfax, which raises concerns about a possible conflict of interest that vitiates the credibility of the disinvestment process. It shows how clumsily DIPAM has handled the entire process of IDBI’s equity sale. It is possible that there are more skeletons hiding to be revealed.In view of what I have stated above, I demand that an independent enquiry be instituted into the IDBI disinvestment process and place its findings before the parliament and the public for a meaningful discussion on the government’s approach to the disinvestment of IDBI in particular and disinvestment of CPSEs in general. Pending such an inquiry, I demand that the ongoing disinvestment of IDBI be kept in abeyance.Regards,Yours sincerely,E.A.S. SarmaVisakhapatnamOctober 31, 2026