Why are IDBI Bank's unions planning to go on strike?

The Leader of Opposition, Lok Sabha and Member of the Indian National Congress (INC) Rahul Gandhi has said in a post on social media on 29 October that he stands with the employees of IDBI Bank, who have asked him why the government was selling a profitable bank.

“When IDBI Bank is privately owned, reservation for SC, ST and OBC (scheduled caste, scheduled tribes and other backward classes) candidates will go with it,” he said to the employees. “Your service conditions, already weakened, will lose their last protection.”

In response Finance Minister Nirmala Sitharaman has listed instances accusing the INC of “using banks and financial institutions as personal entities and pressuring bank employees to extend loans at their whim”.

“The IDBI Bank was handed over to us in poor shape, as IDBI itself was forced to lend to large business groups with close connections to @INCIndia leaders such as Videocon, Winsome, ABG Shipyard, Kingfisher,” Sitharaman said. “These turned into bad loans, causing huge losses for IDBI Bank, which we recognised.”

Strike notice

The All India IDBI Officers’ Association (AIIDBIOA) and All India Industrial Development Bank Employees’ Association (AIIDBEA) have called for a strike on 2 and 3 November in support of their demands.

The unions have argued that the government is selling a profitable bank to a foreign entity, even though the original development financial institution license was issued by the government through IDBI Act, 1964 and not by the RBI. They have also pointed at a political assurance delivered in Parliament in 2003 of government stake not going below 51 per cent.

The call follows a 14 October press release issued by the Ministry of Finance, stating that the Cabinet Committee on Economic Affairs (CCEA) in its meeting had approved 10955230 Canada Inc. (the parent entity of Canada’s Fairfax Financial) as strategic buyer of IDBI Bank for ₹52,878 crore.

According to the deal, Fairfax would get a 60.72 per cent stake in IDBI Bank, comprising 30.48 per cent equity shareholding held by the Government of India and 30.24 per cent equity shareholding held by LIC (Life Insurance Corporation of India). The Government retains 15 per cent residual equity stake while LIC will retain 19 per cent. Both of them will withdraw their nominees from the Board and become public shareholders.

When initial bids were called by the government in the financial year 2025-26, a reserve price of ₹94.42 per share was fixed at that time. But when the initial bids did not succeed, best offer bids were invited and the valuation of IDBI Bank was carried out by two independent agencies.

“The average of the two independent valuations (₹75.99 per share) served as the benchmark price for the evaluation of the qualified bids. The winning bid was found to be higher than the benchmark price as well as the fair value estimates of both the independent valuation agencies,” the release says.

The successful bidder will now be assessed by the Reserve Bank of India and once completed, the government expects this to be the largest foreign direct investment in the financial sector in recent times.

Merger proposal

In a separate note, Fairfax has announced plans to combine IDBI Bank with Digit, and IIFL Capital “to create an entity that is well-positioned to participate in the continued growth and success of Indian markets, and we expect it will provide meaningful and significant benefits to Indian consumers and businesses, as well as to IDBI Bank, Digit, IIFL Capital and to Fairfax for many decades to come”.

Fairfax has proposed to contribute all of its interests in Go Digit Life Insurance, Go Digit General Insurance and in IIFL Capital Services to IDBI Bank.