SEBI Grade A Current Affairs — 24 October 2026

The Indian government and LIC are divesting a combined 60.72% stake in IDBI Bank to Canada-based Fairfax Group for ₹52,878 crore at ₹81 per share. This price exceeds the SEBI-mandated fair valuation benchmark of ₹75.99 per share set by registered valuers. The deal triggers a mandatory open offer under SEBI's takeover code, requiring Fairfax to make a public offer to acquire an additional 26% stake from minority shareholders at the same acquisition price.

This transaction is one of India's largest privatisation exercises since independence and involves several layered regulatory mechanisms that examiners love to test.

**Privatisation and Strategic Disinvestment:** IDBI Bank has been on the government's strategic disinvestment list since 2021. Unlike minority stake sales, strategic disinvestment transfers management control — meaning the government and LIC together relinquish their majority holding and operational control to a private buyer.

**SEBI Takeover Code (SAST Regulations, 2011):** Whenever an acquirer crosses 25% shareholding in a listed company, SEBI's Substantial Acquisition of Shares and Takeovers (SAST) Regulations mandate an open offer for at least 26% of total shares from public shareholders at a price no lower than the negotiated acquisition price. Here, Fairfax acquiring 60.72% automatically triggers this obligation.

**Valuation Floor:** SEBI requires an independent registered valuer to set a benchmark price. The ₹75.99 floor was this valuation; the ₹81 deal price represents a ~6.6% premium, protecting minority shareholders.

**Banking Sector Implication:** Post-acquisition, IDBI Bank transitions from a public sector bank to a private bank under RBI's licensing framework. Existing depositors' FDs remain protected under the DICGC insurance cover of ₹5 lakh per depositor. The change in ownership does not extinguish depositor rights or contract terms.

**Tax Angle:** Capital gains tax applies to the government and LIC on the disinvestment proceeds — a recurring exam theme on how sovereign transactions interact with taxation.

CBDT has clarified that compensation paid to employees under the BSNL and MTNL Voluntary Retirement Scheme 2019 is exempt under Section 10(10C) of the Income-tax Act, 1961, which covers public sector undertaking VRS payouts, and cannot be claimed under Section 10(10B), which applies to retrenchment compensation. The distinction matters because each section carries different exemption conditions, eligibility criteria, and tax treatment, affecting thousands of PSU employees who opted for early retirement under the 2019 scheme.

This CBDT clarification resolves a classification dispute that directly affects the tax liability of BSNL and MTNL employees who accepted VRS in 2019. Understanding why the distinction matters requires knowing what each section covers.

Section 10(10B) exempts retrenchment compensation paid under the Industrial Disputes Act, 1947. It applies when an employer terminates an employee involuntarily — the employee did not choose to leave. The exemption ceiling is the lower of actual compensation, three months' average salary per completed year of service, or ₹5 lakh.

Section 10(10C) exempts VRS compensation received by employees of specified public sector companies, statutory corporations, and other entities notified by the government. The exemption is capped at ₹5 lakh over a lifetime across all employers. Crucially, it applies only when the employee voluntarily opts for retirement under a scheme that meets prescribed conditions (the employee must be 40+ years old or have completed 10 years of service; the scheme cannot result in replacement of the post).

BSNL and MTNL are Central Government PSUs. Their 2019 VRS was a voluntary scheme, not retrenchment. CBDT's clarification therefore correctly routes the exemption to 10(10C). The practical implication: employees cannot stack both exemptions, and the ₹5 lakh lifetime cap under 10(10C) applies. Any excess over ₹5 lakh remains taxable as salary income. For exam purposes, the key takeaway is the structural difference between these two exemption heads and the nature of PSU employment that triggers 10(10C).