A proposed $5.5 billion acquisition of India's state-owned IDBI Bank by Canadian company Fairfax Financial Holdings has drawn opposition from bank employees and political parties. The dispute centers on privatization, the protection of public investment and questions about how the lender was valued for the sale.
The United Forum of IDBI Officers and Employees called on Sunday for a two-day nationwide strike against the transaction. In a post on X, the union raised concerns about transparency in the sale and valuation procedures. It wants the government to halt privatization and concentrate on strengthening IDBI while safeguarding employees' interests and public investment.
Rahul Gandhi, India's opposition leader, backed the employee unions last week. In a statement on Thursday, he argued that public banks serve a nation-building role and should not be treated as assets for disposal. Gandhi also said the proposed transfer of more than 60% of IDBI to Fairfax conflicted with earlier governments' commitment to retain a 51% holding in the lender.
Finance Minister Nirmala Sitharaman defended the government's handling of the bank, saying it had inherited IDBI in poor condition. She attributed its recovery to professional management, prudence and recapitalization exceeding 250 billion rupees, or $2.6 billion. Sitharaman said the lender was ready for another phase of growth, which the government has previously said would be led by a strategic investor.
On Oct. 14, the government said selling more than 60% of IDBI would represent the biggest foreign direct investment transaction in India's financial sector. Fairfax offered 81 rupees for each share, above the average fair valuation of 75.99 rupees. IDBI shares opened at approximately 79 rupees on Monday.
The valuation has nevertheless become a point of contention. Indian publication Businessworld reported on Thursday that government officials had suppressed IDBI's valuation to make Fairfax's bid appear more attractive. The Finance Ministry defended the procedure, saying the bidder had no knowledge of the valuation and those conducting the valuation had not seen the bids.
The planned transaction comes as India sells government shareholdings while seeking to sustain economic growth amid increasing fiscal pressures. This year's divestments have included shares in Cochin Shipyard, Indian Railways Finance Corp, NHPC and Coal India. In August, the government received $3.3 billion from selling a 6.5% stake in Life Insurance Corporation of India, the country's largest life insurer.
