The deal in which Canadian company Fairfax Financial Holdings intends to acquire IDBI Bank for $5.5 billion is facing resistance from the employees of this Indian state-owned bank as well as from political parties in that country.
On Sunday, the joint forum of IDBI management and employees (United Forum of IDBI Officers and Employees) called for a two-day “national” strike against the sale of the bank to Fairfax. According to a post on the X platform by the union, they also expressed “serious concerns” about the transparency of the sale process and valuation process.
The union is demanding that the government "cancel the privatization process" and instead focus on strengthening the banks, while protecting public investments and the interests of employees.
Last week, Indian opposition party leader Rahul Gandhi ( Rahul Gandhi ) publicly supported the workers' union of IDBI Bank against the acquisition by Fairfax. Gandhi stated in a statement on Thursday: "Public banks are not assets that can be sold; they are tools for building the country."
He also stated that selling more than 60% of the shares of IDBI Bank to Fairfax violates the commitments of successive governments to hold 51% of the shares in this state-owned bank.
In response to this, Indian Finance Minister Nirmala Sitharaman ( Nirmala Sitharaman ) stated that when this public sector bank was handed over to the government, it was in a "very poor state," and that it has since been restored through "professional and prudent" management as well as a capital restructuring of over 250 billion rupees (2.6 billion US dollars).
The Finance Minister stated, "IDBI Bank is now ready to enter the next phase of growth." The Indian government previously indicated that the next phase of growth would be driven by a strategic investor.
On October 14, the Indian government stated that the sale of over 60% of the shares in IDBI would become the largest foreign direct investment deal in India's financial sector. Fairfax offered a bid of 81 rupees per share, while the average fair value of IDBI was set at 75.99 rupees per share.
On Monday, the stock price of IDBI opened at around 79 rupees per share.
However, Indian media Businessworld reported on Thursday that government officials had underestimated the valuation of IDBI in order to make the bid for Fairfax seem more attractive. The Indian Ministry of Finance defended its process, adding that a “double-blind” mechanism was used during the bidding process, meaning that the bidders were unaware of the valuation, and the valuers could not see the bids.
As fiscal pressures deepen, the Indian government has been selling its holdings this year in order to keep the country's growth engine running. The government has sold shares in several companies, including Cochin Shipyard, Indian Railways Finance Corp, NHPC, and Coal India. In August of this year, the government earned $3.3 billion by selling a 6.5% stake in Life Insurance Corporation (India's largest life insurance company).
