The United Forum of Bank Unions (UFBU) has called on its members to wear black badges on Friday to protest the government's decision to sell a majority stake in IDBI Bank to Canada's Fairfax Financial Holdings. In a circular dated October 15, UFBU opposed what it termed the "privatisation and foreignization" of the bank, urging the government to roll back its decision. The forum said the government and Life Insurance Corporation of India (LIC) together currently control around 94% of IDBI Bank's shares and alleged that the sale of the lender was unwarranted, given its improved financial performance. "Thus, a performing Bank is being sold away," the circular stated, with the forum questioning the move as being at odds with the government's emphasis on "Atmanirbhar Bharat".
IDBI Bank shares plunged as much as 8% to ₹83.33 in intraday trading, hitting an intraday low during the session, after the Cabinet Committee on Economic Affairs approved the ₹52,878 crore stake sale to Canada's Fairfax Financial Holdings. At the time of writing, IDBI Bank stock traded at ₹83.81 apiece on BSE, down by 7.33% with market capitalisation of ₹90,115.88 crore. The stock had climbed to ₹93.60 on Wednesday, its highest level in nearly two weeks, taking IDBI Bank's market capitalisation above ₹1 lakh crore following the Cabinet's approval. The 60.72% stake sale announcement, which came after market hours on Wednesday, marks the largest foreign investment in an Indian bank and a major milestone in the country's long-delayed banking privatisation drive. However, the deal price of ₹81 per share has created significant market pressure as it represents an 11% discount to Wednesday's closing price of ₹90.40 and fell short of market expectations of ₹100-110 per share. The sale process began in 2022 and faced a setback earlier this year when initial bids fell below the government's reserve price.
**Finance Minister Nirmala Sitharaman described the transaction as a "strategic restructuring" rather than strategic disinvestment, as reported by Essential Business Intelligence. Under the deal, a total of 60.72% stake in IDBI Bank will be sold by the LIC India and the government of India, with LIC offloading 30.24% and the government selling 30.48%. Post the completion of the deal, LIC and the government's stake in IDBI Bank will be reduced to 15% and 19% respectively. The Cabinet Committee on Economic Affairs approved Fairfax subsidiary M/s 10955230 Canada Inc as the strategic buyer for the government's 30.48% stake (for about ₹26,620 crore) and state-run Life Insurance Corporation of India's 30.24% stake (for about ₹26,440 crore). Following the transaction, the government will retain a 15% stake in IDBI Bank, while LIC will hold 19%. Department of Investment and Public Asset Management Secretary Arunish Chawla has said the deal is expected to be completed before the end of the current financial year. Fairfax will also have to make an open offer to IDBI Bank shareholders under applicable takeover regulations, as reported by Bloomberg. Once completed, this will be the largest FDI in the financial sector of our economy so far, according to official statements.
IDBI Bank has demonstrated remarkable financial recovery, with the improvement showing up in both profitability and business growth metrics. According to The Economic Times, IDBI Bank reported a net profit of ₹9,513 crore in FY26, while its total business rose 18% year-on-year to ₹6.27 lakh crore as of September 30. The latest quarterly business update showed deposits rising 17% to ₹3.56 lakh crore and net advances growing 18% to ₹2.72 lakh crore. As of June 30, 2026, IDBI Bank's gross NPA stood at ₹60,896.50 crore, while gross NPA came in at 2.30%. The successful bidder offered ₹81 per share, against a benchmark price of ₹75.99 determined by two independent valuation agencies, according to the government. The forum also recalled the government's earlier assurance to Parliament that it would hold at least 51% stake in the bank following the merger of IDBI with IDBI Bank. Due to its poor financial health, the bank required repeated infusion of capital, initially provided by government and later by the state-owned insurance firm.
The transaction still needs approval from the Reserve Bank of India (RBI), which will conduct a "fit and proper" assessment, as well as the Competition Commission of India (CCI) and other statutory authorities. According to The Economic Times, the successful bidder will be required to present its credentials to the Reserve Bank of India in accordance with the Fit and Proper Assessment conducted at the EoI stage and submit its roadmap for the compliance of regulatory conditions prescribed therein. After comprehensive evaluation by the CGD and after considering the recommendations of the Alternative Mechanism, the CCEA approved Canada Inc. (parent entity Fairfax Financial Holdings Ltd.) as the strategic buyer for the transaction for a purchase consideration of ₹52,878.0806181 crore for the acquisition of 60.72% stake in the IDBI Bank Ltd. The share purchase agreement is expected to be signed and executed before the end of 2026, according to the DIPAM secretary, with Fairfax's investment subject to a three-year lock-in period. The transaction is expected to become the largest foreign direct investment in India's financial sector, according to Union Minister Ashwini Vaishnaw, putting IDBI Bank at the centre of the government's broader push to bring private and foreign capital into the banking sector.
