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Canada-India $5.5 Billion IDBI takeover draws protests from employees and politicians
At a glance
- Fairfax offered 81 rupees per share for more than 60% of IDBI Bank, valuing the deal at about $5.5 billion.
- IDBI employees called a two-day nationwide strike and unions criticized the transparency and valuation process.
- Opposition leader Rahul Gandhi and other politicians support the unions, framing public banks as national assets.
- Finance Minister Nirmala Sitharaman defended the sale, noting government recapitalization and IDBIs recovery.
- The government describes the auction as a double-blind process; media reports question whether valuations were suppressed.
- The transaction would be the largest foreign direct investment in Indias financial sector and comes amid broader state divestments.
Canada-India bank takeover draws opposition
Canadian insurer and investment firm Fairfax Financial Holdings has drawn fierce pushback in India after winning a bid in October to acquire a majority stake in state-owned IDBI Bank. Fairfaxs proposed purchase an offer of 81 rupees per share valued at roughly $5.5 billion for more than 60% of IDBI would become the largest foreign direct investment in Indias financial sector if approved.
Employees of IDBI and several political figures have voiced strong objections. The United Forum of IDBI Officers and Employees called a two-day nationwide strike to protest the sale, saying it has grave concerns about how the valuation and sale process were conducted and urging the government to cancel privatization and instead strengthen the lender while protecting public investment and staff interests. Opposition leader Rahul Gandhi publicly backed the employee unions, arguing that public banks should be instruments of nation-building rather than assets to be sold, and noting that past governments had committed to retaining at least 51% public ownership.
Indias finance minister, Nirmala Sitharaman, defended the divestment, saying the bank had been taken over by the government when it was in poor shape and revived through professionalism, prudence and a recapitalization of more than 250 billion rupees (about $2.6 billion). She said IDBI is now poised for its next growth phase and that a strategic investor would drive that expansion.
Valuation questions and broader disinvestment push
The government has argued the competitive process was run as a double blind bidding exercise valuers set a fair value without seeing bids, and bidders did not see the valuation. Fairfaxs bid exceeded the average fair value of 75.99 rupees per share established by the valuators. Still, Indian media reported that officials suppressed IDBIs valuation to make Fairfaxs offer appear more attractive; the finance ministry has publicly defended its procedures.
Shares of IDBI opened Monday around 79 rupees per share. The government highlighted on Oct. 14 that selling more than 60% of IDBI would mark the biggest FDI transaction in Indias financial sector. The deal comes amid a broader push this year by New Delhi to divest stakes in state-owned companies to help sustain economic growth amid fiscal pressures. Recent sales include stakes in Cochin Shipyard, Indian Railways Finance Corporation, NHPC and Coal India, and a 6.5% stake in Life Insurance Corporation of India that raised about $3.3 billion in August.
The Fairfax-IDBI transaction sits at the intersection of politics, labour interests and Indias strategy to attract private capital into its state-owned enterprises. Approval and implementation of the deal will not only determine ownership of a major public lender, but could also influence investor sentiment about future privatizations and the safeguards that creditors, employees and the public can expect in such transactions.
