EAS Sarma, who previously served as Secretary to the Government of India, has called for the Cabinet Committee on Economic Affairs' 14 October resolution to offload the government's and LIC's stakes in IDBI Bank to be put on hold until an independent inquiry can be carried out. In a letter addressed to Finance Minister Nirmala Sitharaman — which he shared with a news channel — Sarma called for the findings to be placed before Parliament, arguing that the decision rested on questionable legal ground, attributed insufficient value to IDBI's assets, and ran counter to assurances previously given by the government.

In a written communication dated 4 August, Sarma had set out a range of objections to the disinvestment process, pointing to what he described as a procurement environment that lacked both transparency and open competition. Approval from the CCEA has since been granted for M/s 10955230 Canada Inc. — a subsidiary of Fairfax Financial Holdings Ltd. — to take on the role of strategic buyer in the disinvestment of IDBI.

Valued at ₹52,878 crore, the proposed deal would transfer a combined 60.72 per cent holding in IDBI Bank Ltd. to a buyer, with the government's 30.48 per cent equity stake and LIC's 30.24 per cent together forming that bloc. Sarma characterised the amount as a "pittance." LIC — an insurer carrying 262 million policyholders on its books — drew on those members' pooled funds to build up the 49.24 per cent equity holding it now carries in IDBI. No disclosure to policyholders accompanied LIC's decision to offload a 30.24 per cent portion of its holding.

Following the deal, both the government and LIC would hold minority stakes in IDBI, leaving neither party with meaningful input into how the bank is run going forward.

Pointing to legal concerns raised beforehand, Sarma put forward the view that IDBI holds a portfolio of land holdings spread across multiple locations throughout the country. Those parcels were obtained under the authority of the Land Acquisition Act of 1894, with the stated justification that they served a "public purpose" — a term Section 3(f)(iv) of that statute defines as applying to entities wholly owned or controlled by the state. Legal analysts have noted that any transfer of IDBI to a private entity could raise questions about whether those land holdings would revert to government ownership, given that such a change in control may place the transaction at odds with that statutory definition.

Section 5(1) of the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003, carries an implicit guarantee that the terms and conditions governing IDBI employees' service cannot be modified, yet the bid documentation contains no reference to this statutory protection. Conditions attached to the disinvestment process, as laid out by the Department of Investment and Public Asset Management, appear to run counter to that provision. Questions about whether DIPAM kept the CCEA fully informed of the legal risks attached to the transaction arose from the department's apparent drive to push the deal through.

Across the five financial years that followed IDBI's removal from the Reserve Bank of India's Prompt Corrective Action framework, the bank's cumulative operating profit — measured from the 2021–22 base year onward — reached ₹48,151 crore. Some analysts have argued that delaying the disinvestment of IDBI by a year could have allowed the bank's profit trajectory to outpace the sale proceeds now on the table, though that outcome remains a matter of projection rather than established fact. The gap between IDBI's assessed worth and the proceeds recorded from the divestiture process points to a valuation that analysts may view as understated.

Sarma noted that both the Ministry of Finance and DIPAM would face pointed questions from Parliament on the matter. A Preliminary Information Memorandum calling for Expressions of Interest in the disinvestment process went out to prospective parties on 7 October 2022. Over the five-year span that DIPAM spent managing the disinvestment process, IDBI's accumulated profits came to more than nine-tenths of what the sale was ultimately expected to fetch. Sarma noted that any assessment of the bid figure should weigh it against IDBI's earnings performance.

Prior to the privatisation process, the central government and LIC together accounted for a combined stake exceeding 90 per cent of IDBI's total equity. Being a government-owned institution, IDBI fell under the reservation framework for SC, ST, and OBC communities — obligations rooted in constitutional provisions and the broader social welfare goals outlined in the Directive Principles of State Policy. Under the proposed arrangement — in which 60.72 per cent of equity would transfer to private hands — reservation-based hiring provisions for Scheduled Castes, Scheduled Tribes, and Other Backward Classes are set to lapse, narrowing the pool of positions available to those communities.

Around 9,500 workers drawn from underrepresented communities stand to face a period of instability as a result. Of the total staff, 6,911 are women and a further 884 hold registered disability status. Workers from SC, ST, and OBC categories have put forward calls for the government to safeguard their statutory entitlements — calls that have so far gone unaddressed.

Lower-income and otherwise vulnerable communities face tangible consequences from the withdrawal of public investment. Measured at the close of March 2026, customer deposits held across IDBI's books reached ₹3,47,163 crore, while the lender's combined business volume — spanning both advances and deposits — came to ₹6,00,789 crore in total. Those who kept personal savings at IDBI did so with the expectation that government backing stood behind the institution.

In a disclosure lodged with the National Stock Exchange on 14 July 2026, IDBI Bank stated that neither the institution nor any of its shareholders had any knowledge of the proposal put forward by DIPAM. Sarma argued that proceeding without stakeholder approval, the privatisation of IDBI would represent a breach of the trust placed in those responsible for the decision.

Questions about whether Fairfax holds a competing interest arise from its existing majority ownership of Catholic Syrian Bank. Existing Reserve Bank of India policy bars any single promoter from holding control over two banks at the same time, and Sarma argued that this restriction renders the government's plan to divest IDBI in favour of Fairfax fundamentally flawed from the outset, given what he described as an inherent conflict of interest. Beyond its insurance holdings, Fairfax carries ownership positions across four entities in India's financial sector — IIFL Capital Services, IIFL Finance, 5paisa Capital, and Valueattics Re. Sarma noted that such holdings carry the capacity to produce further conflicts of interest.