IDBI Bank Sale to Fairfax Sparks Government Bill Controversy
The government's approved sale of IDBI Bank to Canada's Fairfax for ₹52,878 crore has ignited political debate and employee protests over public sector banking policy.
The government has approved the sale of IDBI Bank to Canada's Fairfax Financial Holdings for ₹52,878.08 crore, sparking immediate controversy. The Cabinet Committee on Economic Affairs cleared the transaction on October 14, which will see the government and the Life Insurance Corporation of India (LIC) reduce their combined shareholding from around 95% to 34%.
This strategic sale involves the divestment of a 60.72% stake. The specific breakdown of the sale is as follows:
| Stakeholder | Stake for Sale | Retained Stake |
|---|---|---|
| Government of India | 30.48% | 15% |
| Life Insurance Corp (LIC) | 30.24% | 19% |
Background and implications
The sale carries significant implications for the bank's employees and the government's historical commitments. IDBI Bank currently has reservation provisions for Scheduled Caste, Scheduled Tribe, and Other Backward Class candidates. Critics argue the transfer to a private entity may end these policies. The move also revisits a 2003 government assurance to Parliament that it would retain a minimum 51% ownership in the bank.
Leader of Opposition in the Lok Sabha, Rahul Gandhi, has backed the bank's staff. He wrote a letter to employees on October 29 and had previously interacted with them at Parliament House in March last year. "I stand with the employees of IDBI Bank," Gandhi said. His Congress party supports a strong public sector alongside the private sector.
Criticism and opposition
Opposition to the sale is mounting. The United Forum of IDBI Officers and Employees is planning a two-day nationwide hunger strike on November 2 and 3. The forum opposes the sale to Fairfax and demands the government acquire at least another 6% stake. Some critics have also questioned the sale price, labelling it cheap for a now-profitable institution.
The bank's financial turnaround is a key point. It was handed over to the BJP government in poor shape, with a gross Non-Performing Asset (NPA) ratio of 31.78% in September 2018. The government infused ₹25,000 crore capital between 2010 and 2020. By March 2026, the gross NPA had fallen to 2.32%. The bank's net profit rose 27% to ₹9,513 crore in the 2025-26 financial year.
Government response and assurances
Finance Minister Nirmala Sitharaman has defended the sale as part of the government's strategic restructuring plans. She stated that "all due process was followed" in the transaction. The government has cited the bank's revival through recapitalisation as a success story, a point highlighted in a White Paper on the Indian Economy released in February 2024.
In parliamentary debate, Sitharaman cited historical examples of Congress leaders influencing bank loans. The government maintains the sale is a policy decision aligned with its economic vision. IDBI Bank employees plan a two-day nationwide hunger strike on November 2 and 3.
