The proposed sale of IDBI Bank to Canada’s Fairfax Financial Holdings will not alter existing employees’ service conditions or affect pension commitments, a senior government official said on October 23, seeking to allay concerns among staff protesting against the transaction.
Arunish Chawla, secretary of the Department of Investment and Public Asset Management (DIPAM), said the Rs 52,878-crore deal involving the sale of more than 60% stake in the lender would protect the interests of existing employees and pensioners, PTI reported.
Under the share purchase agreement, the strategic buyer cannot change or modify employees’ service conditions to their disadvantage, Chawla told PTI.
His assurance comes as IDBI Bank employees oppose the government’s divestment plan and have called for a strike across the lender’s branches in early November. The United Forum of Bank Unions has also extended support to the proposed strike.
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Addressing concerns over retirement benefits, Chawla said a dedicated pension fund had been set aside and existing commitments to pensioners would continue to be honoured.
He also clarified that IDBI Bank is not a nationalised bank and that its employees’ service conditions are determined by the bank’s board in consultation with employees, rather than directly by the Union government.
Chawla said the lender would continue to operate as a board-managed company after the transaction, with its operations governed by the same company and labour laws that apply today.
The bank is being restructured as a going concern, he said, indicating that the change in ownership would not alter its basic legal and operational framework.
The proposed transaction has brought employee concerns over job conditions and retirement benefits into focus as the government moves ahead with the strategic sale. The assurances from DIPAM are aimed at clarifying the protections available to existing staff and pensioners under the agreement.
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While the ownership structure is set to change following the sale, the government’s position is that existing employees’ service conditions cannot be modified to their disadvantage by the buyer, and pension obligations will continue to be met.