Bank unions to protest on Oct 16 against IDBI Bank stake sale to Fairfax

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.

The protest call comes a day after the Union Cabinet approved the sale of a 60.72% stake in IDBI Bank to Fairfax for ₹52,877.07 crore, transferring control of the lender to the Canadian investor.

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 said.

The bank unions said IDBI Bank had public deposits of around ₹3.5 lakh crore and earned net profits of ₹5,600 crore, ₹7,500 crore and ₹9,500 crore in the last three years.

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.

Questioning the sale to a foreign investor, the forum said the move was at odds with the government's emphasis on 'Atmanirbhar Bharat'.

"This is totally unwarranted and undesirable. We strongly oppose the same," the circular said, demanding that the government roll back the decision.

The proposed transaction involves the sale of the government's 30.48% stake and LIC's 30.24% holding in the lender.

The government and LIC will jointly retain a 34% stake after the transaction.

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 government has said the transaction, once completed, would be the largest foreign direct investment in India's financial sector.

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 minority shareholders of the bank.