The United Forum of Bank Unions (UFBU) has called for a protest on October 16 against the government's decision to sell a majority stake in IDBI Bank to Canada's Fairfax Financial Holdings. The unions argue that the sale is unnecessary because IDBI Bank's financial performance has improved significantly in recent years.
- UFBU urges members to wear black badges in protest on October 16.
- The government and Life Insurance Corporation of India (LIC) will retain a combined 34% stake after the sale.
- The sale involves transferring a 60.72% stake in IDBI Bank to Fairfax for ₹52,877.07 crore.
- IDBI Bank has shown strong profits and holds large public deposits.
- The unions claim the sale contradicts the government's 'Atmanirbhar Bharat' policy.
Why are bank unions protesting the sale of IDBI Bank's stake?
The unions believe that selling a majority stake in IDBI Bank is unwarranted because the bank has improved its financial performance. They argue that a performing public bank should not be privatized or sold to a foreign investor. The UFBU issued a circular opposing the "privatisation and foreignization" of the bank and called on members to protest by wearing black badges.
What is the current ownership structure of IDBI Bank?
Before the sale, the government and LIC together hold about 94% of IDBI Bank's shares. The sale involves the government selling its 30.48% stake and LIC selling its 30.24% stake to Fairfax. After the transaction, the government and LIC will retain a combined 34% stake in the bank.
How has IDBI Bank performed financially in recent years?
IDBI Bank has public deposits of approximately ₹3.5 lakh crore. It has reported net profits of ₹5,600 crore, ₹7,500 crore, and ₹9,500 crore over the last three years, showing a steady improvement in its financial health.
What concerns do the unions have about selling to a foreign investor?
The unions argue that selling a majority stake to a foreign company contradicts the government's focus on "Atmanirbhar Bharat," or self-reliant India. They believe that the sale undermines national interests and public ownership of important financial institutions.
What are the details of the sale transaction?
The Union Cabinet approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings for ₹52,877.07 crore. Fairfax offered ₹81 per share, which is higher than the benchmark price of ₹75.99 per share determined by independent valuation agencies. The government has stated that this will be the largest foreign direct investment in India's financial sector once completed.
When is the transaction expected to be completed?
The Department of Investment and Public Asset Management Secretary Arunish Chawla has indicated that the deal is expected to be finalized before the end of the current financial year.
Will Fairfax make an offer to minority shareholders?
Yes, Fairfax will be required to make an open offer to the minority shareholders of IDBI Bank as part of the transaction process.
